Yves here. An interesting theory. Readers?
By New Deal Democrat. Originally published at Angry Bear
This was originally one post but I think it works better divided into two parts.
One of the issues I keep reading about recently is the (alleged) divergence between “soft” and “hard” data. For example, consumer sentiment as measured by the University of Michigan (and the Conference Board, and Gallup) has been making new highs since the Presidential election last November (according to Gallup, mainly fueled by a massive gain in optimism among Republicans). while “hard data,” chiefly industrial production but also including consumer spending, has failed to follow suit.
One problem with this thesis has been that manufacturing as measured by the industrial production index, turned up for five months in a row. It turned down in March, and one good measure of how intellectually honest the commentator is, is whether they have been using a consistent measure for industrial production:
Production as a whole only fell in January and February because of utility production (warm winter in the eastern half of the US). In March, production only rose because utility production rebounded sharply (March was actually colder than February in much of the East).
So a Doomer who was all over the decline in industrial production for the last two months should be touting its advance in March. If the Doomer backs out utilities this month, take a look to see if they did the same thing last month — almost certainly not.
Another problem with the soft/nard data dichotomy is that online retail appears to have reached a tipping point where it is causing big damage to brick-and-mortar retailers, who are laying off thousands of employees and even shutting down completely.
I am concerned that the official real retail sales numbers might not be adequately picking up online retail:
But here is Amazon.com’s sales numbers for 2016 vs. 2015:
And here is the number that really jumps out — Gallup’s consumer spending, here measured for the last two years:
Pay attention to that $100 line. Except for Christmas seaon 2015, that line wasn’t breached at all in the 14 day average until December 2016. And spending has remained above that $100 line all during February, March, and April so far. Most often for the last 10 weeks, this measure has been up over 10% YoY. Now, before you criticize Gallup’s measure, it earned its bones in 2011 at the time of the Debt Ceiling Debacle, when it was the only measure that accurately reported that consumers hadn’t stopped spending.
So if retailers are reporting poor sales, but consumers are telling people that they are spending 10% this year vs. last year, then we have to wonder if the official measures aren’t catching the full extent of the big secular increase in online sales.
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So, online aren’t the only “retail” sales that might account for a missing 10% spending Yoy…
There’s the grey/black market of used/reuse goods…not picked up by standard production surveys but seen in spending reports by consumers.
And there’s always full black market where sales are for cash and never put on the books. As a small business owner, I can’t count the requests for “no receipt” cash discounts.
I have no doubt c-suites has figured out how to hide today’s sales in tomorrow’s books if it suits their story…
Same as inflating expenses for their taxes…
Unfortunately most people don’t read Naked Capitalism or anything else that offers a cautionary view of the long-term “black-hole” effect that an unrestrained Amazon will have on every Brick and Mortar store within its “reach”.
Will that small minority of people who DO read such material and who DO think about it be enough to save some Brick and Mortar stores from extinction if they make Amazon their “store of very last resort” and Walmart their “store of very second-to-last resort”? Perhaps that small minority of people may have to start discovering which B&M stores are still somewhat surviving after some more years of Amazon’s black-hole suction, and patronize the most nearly survivable ones so as to maximise their survival chances. A sort of retail-triage, if you will, performed by politically motivated and committed customers to focus their B&M customer dollars on those B&M stores which have the greatest chance of being saved.
I do deplore the hollowing out of local downtowns, but that was happening long before Amazon. First it was shopping malls, then Walmart, now Amazon. It really sounds like a classic capitalist progression. Is there a defect in capitalism we can fix to bring back mom & pop? Should that be our goal?
Why should individual consumers be so “woke” as to shun Amazon in favor of brick retailers if Amazon offers superior price, convenience, selection and service? Isn’t it the role of the traditional retailer to counter in at least one of those areas? Is Amazon doing something illegal or immoral? If not then the perceived problem is systemic, and asking consumers to give up advantages to save Sears or even Maude’s Dress Shop is irrational and doomed to fail in the long run.
One of the problems is overpriced real estate.
Another one is that it is much easier to raise money for new builds and new infra than for renovations and maintenance.
It seems like something that would help would be a job guarantee at a living wage. This would help the gig economy overall by giving job seekers a choice and forcing employers to ante up to their workforce instead of corporate salaries and shareholders.
Wouldn’t more against monopolies help? I mean are we really angry with Walmart, Amazon, and United Airlines?
Or are we angry about how they’ve been allowed to consolidate and drive out competitors and hire employees with no bargaining rights and set prices without any controls?
+1
Democracy? What Democracy?
Are you seriously asking if Amazon does anything illegal or immoral? You must not read NC at all:
http://www.nakedcapitalism.com/2014/10/matt-stoller-need-break-amazon.html
http://www.nakedcapitalism.com/2017/03/will-amazon-destroy-us-jobs-china.html
http://www.businessinsider.com/brutal-conditions-in-amazons-warehouses-2013-8
https://www.theguardian.com/technology/2016/dec/11/amazon-accused-of-intolerable-conditions-at-scottish-warehouse
TLDR amazon is absolutely horrible and the only way its more convenient and better for you, the customer, is that it externalizes every single risk and danger onto its employees and the public. I wonder if you were just trolling.
Thanks. I saw that comment, and I was going to reply, but first I scrolled down, and saw that you provided more information than I would have. Well Done! Amazon.com is a genuinely evil organization — most of the employees are victims, of course, but the people at the top are sociopaths.
Amazon Sales are growing rapidly because so many people, including me, find the experience of clicking on line, particularly with product reviews, much better than searching through stores. I hate shopping and malls.
My cousin travels the country in his Rv as a nomad and loves it. During holiday season he works at amazon, makes enough to supplement retirement.
Taking advantage of the ongoing recession to squeeze workers is what most employers are doing these days, amazon no different. The problem is not what workers do but how little they’re paid, this on account of both parties working diligently to suppress wages for half a century.
We need more gov spending, especially infra, better gov stats, better trade deals, uni health care, less foreign wars, etc, all things both parties will never, ever provide because the elite are so well paid to not provide them. And they know if they ever reverse course they will no longer be among the elite.
No, at Amazon, the problem is worse than low wages, which is a problem at a wide variety of companies. People at Amazon are treated like throwaway trash by the company; the conditions in Amazon warehouses are abysmal. Read the third and fourth links that Corbin Dallas provided, and you’ll see what I am referring to. A web search will reveal more articles about this. Use this for your search (with no quote marks):
It doesn’t matter how convenient Amazon may be, shopping there, unless done as an absolute last resort, is morally wrong.
It’s not like it is easy to compare the ethics of companies when I buy a product. On top of becoming an expert in asset management and health care, I now have to analyze all companies when I buy my tube of toothpaste?
and then Amazon is just a retailer, not even the manufacturer, whose ethics you then need to evaluate. How is the product itself actually made? Some people don’t like the retailer Whole Foods for instance for various reasons, but a lot of the products it carries ARE made by fairly ethical companies (maybe less so if it goes for the cheap, we’ll see).
If you shop at Amazon and get a product that is more ethically sourced than that which is at the Big Box is it more or less ethical than buying something at the Big Box staffed with employees, but made with slave labor?
The root problem with service jobs is of course is capitalism plus lack of worker bargaining power.
Yes, because there has never been any labor exploitation under any other system except Capitalism. Or private business ownership. If you want to stop or at least put a speed bump into labor exploitation you’re going to have to cast your net much much wider.
The abuse of Workers was/is going on, before Amazon came into existence. It started with globalization, global labor arbitrage and will get after robotics!
Now it is happening right at the door step in ‘home town’, and all the complaints, NOW!
We are under ‘Our State-Corporate Plantation Economy’
http://www.oftwominds.com/blogapr17/corp-plantation4-17.html
it started long before globalization, why there was a labor movement in the first place.
Of course we can’t take the time to evaluate the ethics of every company from whom we might purchase products or services. But if we know for certain that a company is severely abusive, and there are reasonable alternatives, then we have an obligation to choose one of the alternatives. We know that Amazon.com is an abusive and harmful company, so that should settle it.
Well, I’m just gonna say it: my sister works for Amazon as a picker/packer. She sincerely likes it better than anywhere else she has worked since she turned 50 and suddenly lost her 20-year “knowledge worker” job. They work your butt off but she says they listen, they are fair and they pay quite a bit better than anything else she was offered. She also got health insurance from day one.
This is surprising. How long has she worked there? Is it possible that Amazon is starting to feel the heat from all of the bad publicity over the past few years? Or do some states have stricter laws about the way that workers are treated?
Hi Rhondda, I’m seriously interested in learning the truth about what happens at Amazon.com. Over the part five years, I’ve read so many articles about horrid conditions at Amazon, I’m skeptical about any good news. But things change, and maybe some of those articles were mistaken or fraudulent. If you can point us to tangible evidence about good working conditions in Amazon warehouses, it would be very helpful.
This is perhaps a little like disagreements about Syria or other trouble spots around the world. People have strong opinions, but few of them really have access to reliable facts.
Thanks.
I think another part of this, which you get at in your first para, is selection.
The move over the last 20 years to “slim inventory”, or whichever buzzword they’re calling it these days, has really hurt retail, and that’s a hurt they’re never going to be willing to admit, because of course it came from the business majors at the top. By cutting what can be found on-site to only high-dollar items and what is “most likely” to be bought rather than a robust selection, B&M’s make physical shopping an arduous and frustrating experience. You go to a book store, you can only find the most popular volumes of the series you like; you want to buy cups you can’t find cheap, durable, bulk plastic ones anywhere; ect.
You end up having to shop online just to find what you’re looking for, and then, in future, you want to shop online instead to avoid the hassle(and expense) of driving all over town looking for something you never end up finding. By trying to slim down inventory and maximize its short-term profit, B&Ms condemned themselves to inflexible too narrow selection. They cut their own throats.
Oh and, since most of the smaller ones also cut their own distribution and outsourced it to Amazon to save money, they ended up handing off business to Amazon twofold; both by driving customers their way, and by directly paying them to ship their merchandise.
Another phrase for “slim inventory” is “Just In Time inventory management” (“J.I.T.”). J.I.T. means “at least one day late”.
After reading the articles from nakedcapitalism on how Amazon treats their warehouse workers, I decided to stop buying from them. I love online shopping — but now try to find online stores that sell directly. I’ve been able to easily find as-good-as or better quality (and better price) products directly from manufacturers or other stores — rather than via a general online maketplace like Amazon.
Is Amazon doing something illegal or immoral
was not most of amazons profit for many years due to not paying sales tax that brick and mortar cannot avoid?
Not just Amazon. I recently had to order some repair parts for my pressure cooker. I could either order the parts from the manufacturer (probably licensed to do business in all states–ergo sales tax), or I could order the parts from an authorized distributor in Nebraska, a company that is only licensed in Nebraska. I chose the Nebraska company due to no sales tax. The transportation costs would have been the same in either case.
There was the opposite trend too. Before all those rows of retail stores on Main Street there was the Sears catalog. In most towns the catalog preceded the store. So we are just going back to basics maybe.
Downtown shopping was supplanted by out-of-town malls. Homogenisation of retail squeezed out diversity and owner-managed outlets. Use of scanners to restrict stock to fast-moving items reduced choice and casual shopping. Once you have to buy what’s available you start to focus on availability and it is always better online.
Cost of Search is key. Also, with so much being produced by the same contractor for retail outlets quality has gone downhill. You know they use cheap components in expensive presentation and that clothes are cut cheaply and sewn poorly and wash badly and are bought by container load on the basis that 70% will be junked and the 30% must be over-priced to yield margin
“Once you have to buy what’s available you start to focus on availability and it is always better online.”
+1
but it’s somewhat offset by inability to see things in person (really more important for clothes but useful for other things as well)
You raise some interesting questions.
The simplest one to answer is that , yes, Amazon is doing many immoral things. I don’t know about illegal.
And yes, part of this is capitalist retrogression and de-evolution in action. The problem was solved decades ago with the passage and ferocious enforcement of anti-trust laws. Then the trust-builders 2.0 bought and paid for government personnel who would stand down anti-trust enforcement and set capitalism free to resume its downward de-evolution.
So purging and burning the pro-trust/ pro-monopoly bad-actor facilitators out of government and the restoration of ferocious anti-trust enforcement would solve some of these problems.
Meanwhile, avoiding the Sucking Black Amazon Hole is not a matter of “wokeness”. it is a matter of people understanding that if they exterminate enough jobs where they live, that eventually their own jobs will be among the exterminated. And Amazon is a mass jobicide machine. Those people who want to help Amazon put hundreds of thousands of people out of work certainly deserve to lose their own jobs, lose their own money, starve to death, and die. And maybe that is what will happen. Darwin 101. It is not a matter of “wokeness”. It is a matter of “non-stupidness”. Stupid people buy from Amazon.
Same thing can be said about buying products from any where made in abroad! Why point at Amazon only?
Whether morally right or wrong, the American Labor wages NOT competitive enough foreihn companies, went DOWN once the globalization began!
As I have been saying ‘ The capital is MOBILE and can go anywhere in the World where as the Labo is NOT!’ How can you rectify this and by what measures?
How to rectify this? By abrogating all Free Trade Agreements and withdrawing from and repudiating all Free Trade Organizations. Then instituting militant belligerent protectionism to protect the re-growth and restoration of some basic and consumer thingmaking industries in this country.
In the meantime, one can avoid buying through the uniquely abusive Black Hole Amazon. There are plenty other less abusive and less socially dangerous on-line places to order things.
I only used to shop Amazon when I needed something I could not buy locally. Price was a small issue. But recently, my favorite haunts (HomeDepot, Lowes, Walmart, etc) are no longer selling things I used to routinely buy there. So I am slowly turning to Amazon for more and more things for only one reason, they have it in stock. I recently tried to buy a couple of replacement sunglasses that were originally purchased at BJ’s. I wanted the same item because it fit nicely over my prescription lenses. They told me they no longer carried them. When local stores cut back on inventory to save money, and buyers go elsewhere, they have only themselves to blame.
That is certainly a problem. Did Amazon cause the problem by luring away so many B&M hardward buyers that B&M hardware stores can no longer afford to keep things in stock? Or did B&M stores drive customers away from themselves and towards Amazon by refusing to keep ever more things in stock?
> I do deplore the hollowing out of local downtowns, but that was happening long before Amazon. First it was shopping malls, then Walmart, now Amazon.
I agree. Amazon is successful because it’s more efficient. The ability to search for the same product across hundreds of vendors and read reviews at the same time is extremely useful. Many people cannot afford the time or the fuel that it would take to accomplish the same shopping task by driving around town. There is still plenty of room for competition in this space: every city should have its own local version of Amazon with a delivery service.
A thriving downtown needs a dense urban population and sensible public transport infrastructure. As long as Americans refuse to accept higher gas taxes or pay for public amenities, neither of these are likely.
Needless to say, Amazon is nothing to do with this. Plenty of places in the world (and even some cities in the US) have thriving downtowns *and* vibrant online sales. You might even find that online sales are lowest in the least dense, most sprawling cities — because these people just get in their cars and drive to the local mall to buy everything they need, whereas urbanites buy services locally and products online. That’s good for typical small businesses (hairdressers, bakers, taco trucks, etc) and not so good for faceless big box stores.
Even if I read NC, if the exact same commoditized product is sold at different places, I will usually buy where it is cheapest. Why would I pay more when chances are the top managers or some middlemen get more loot without adding any social value.
I will pay more when the product or service is better or it obviously helps the local economy.
With most products being made in China, I don’t see why one would buy but the cheapest. Big on line retailers make out like bandits and locals are being hung out to dry. I try to buy local as much as possible. On line purchases only help the shipping companies and more shipping worsens the warming of the planet.
only Amazon is NOT the cheapest anymore, that was a short term plan to get a monopoly and now they have that. So costs and shipping are going up, up, up. But what online retail in general (including but not restricted to Amazon) has that B&M doesn’t is wider selection.
does it require me to buy cheap Chinese junk?
Funny, I would rather patronize a smaller bookstore, but I just overpaid to get a book at B&M for just that reason, to help preserve alternatives to Amazon.
Powell’s didn’t have it?
I never remember to even try Powell’s, but I’m also not buying a lot of books these days, sadly.
Right now, I’m trying to focus on buying in the neighborhood. I figure that maximizes the economic benefit to the community. I’m not willing to cut out Trader Joe’s, though. The only really independent markets around here are just too inadequate in too many ways. Meanwhile, it’s horrifying to realize just how very little of the money I spend can stay here. There are very few non-chain options for anything. So I can spend locally, and I realize that does something important. But it would be a lot better if the profits didn’t all flow to some headquarters far away. Which leads me to wonder, having seen your comment — if my primary goal was to erode Amazon’s monopoly power, would it be better, for example, to buy my B2 in person at GNC, or online at Walgreen’s enhanced web site? I don’t have the economics knowledge base to even begin to analyze the multipliers and relevant issues. (And I do realize that my personal choice, by itself, makes very little difference; but that’s how they keep us compliantly engaging in these transactions that have broadly negative effect.)
Research the benefits of the “multiplier effect.”
Every dollar spent locally recirculates a certain number of times and provides more taxes, salaries, incomes etc.
https://www.amiba.net/resources/multiplier-effect/
Buying from big box sends the profits out of town and hampers the multiplier effects. Employers that hire illegal aliens further cripple local economies as the workers send most of their money to their home village and they buy nothing but food, which in California is not taxed.
Just a thought, but could the stronger dollar be leading to people buying more online from outside the US? I know UK online retailers have been reporting booming sales as foreign customers seek to take advantage of the weakening pound sterling.
Once I bought something Made in China from a US supplier – stupid really – I paid import duties. Had I bought direct from Hong Kong it would have been duty free
…but, it would take 3 weeks to get to you.
How many match sticks did the girl sell in the market too day…. oops orders of magnitude and the books resemble spaghettification…
disheveled…. what are we measuring again – ????
From the post: “This was originally one post but I think it works better divided into two parts.”
So, are we going to get the 2nd part?
here: http://angrybearblog.com/2017/04/real-wages-and-spending-i-dont-think-consumers-will-roll-over-that-easily-part-2.html?utm_source=rss&utm_medium=rss&utm_campaign=real-wages-and-spending-i-dont-think-consumers-will-roll-over-that-easily-part-2
I always wondered if local swap groups have had an impact – facebook makes it easy to build up a community oriented group and the costs of used, but decent quality stuff is often lower than new crap.
In my neck of the woods, Ottawa, I have to say that with the emergence of big box mall strips, older malls lose tenants and become increasingly unattractive. New stores = fast fashion for teens.
The specialty stores seem to be spread out across the 60km city… looking for cheap rents typically located in decaying sites…. that’s what happens when there is a bubble in real estate vs. the real economy.
As for the big box mall strips, the experience is incredibly unpleasant:
-Stores too big with lack of choice (go figure!)
-Dismal landscaping with skimpy shrubs = depressing display of overwhelming amount of cement and asphalt.
-Lack of sidewalks = need to hop in car to get from one store to the other.
-Huge parking with lack of exits = congestion and driver impatience.
-Restaurant terraces with a view of cars, cement, asphalt and traffic noise.
If the whole shopping experience has become commoditized, why not just order on line?
Agree with your observations about shopping in malls and big box retailers, Moneta, and that it is generally an experience to be temporarily tolerated as infrequently as possible. In addition to your suggestions regarding typically sterile retail environments, would only add that casual seating and coffee spaces might help; i.e., places to meet and converse. Given economic trends, perhaps we should also be thinking about converting these retail spaces to alternative uses: schools, apartments, professional offices, light manufacturing, etc.; or simply converting them back to green spaces.
What is so appealing about the pedestrian access, small shops retail environments in other countries?…
Since physical health depends on moving throughout the entire day, not just for half an hour after supper, my goal is to incorporate movement in my daily life so I don’t have to join a gym.
Mental health depends on beauty and quality
interactions. So I try to avoid soulless areas with too much cement and asphalt that lead to empty human contact.
If I must get in a car to get my crap as cheap as possible and look at decrepit infra or too much cement and asphalt, and suffer road rage, this means that dollars gained to get crap as cheap as possible ends up taxing my physical and mental health plus robs me of my time.
I bike a lot and most malls are not cyclist friendly. But I’m stuck in a car centric society where too many are married to their car, thinking it gives them freedom when in reality it is the root source of their misery.
Sorry but…
I love my truck. 257,000 miles and still going strong!
I had a neighbor about 10 years ago who developed strip malls in Arizona and Nevada. After the financial crisis modified a little we asked him how business was, anything new? And he replied that they weren’t doing malls these days because there weren’t enough roofs. Meaning suburbia had stopped building houses. Which, according to some statistics is still the case; most new construction is multi-family construction. Probably fewer cars and less money.
Some lenders I know have cut back on retail CRE lending due to the Amazon and online shopping effects. That will mean more store vacancies, tenant and borrower delinquencies and foreclosures with some eventual re-purposing of former retail sites to other uses. That is often a euphemism for ‘who can we get to fog up a mirror and occupy our building’ along the lines of store-front churches, karate studios and similar low-investment uses. No need to re-fit the space when they just need open floors to do their thing. That ripples through the construction and other support functions, in a reverse multiplier effect on the local economy. Expect more boarded-up storefronts and vacant malls for a while.
Hmm. Who are these ” .. consumers are telling people .. ” persons? How many are they? How are they acquired? Are polls even relevant today?
I am not telling anyone anything, I don’t know anyone who does – the pollsters, robo-dialers and scammers are only allowed to cold-call people on fixed-line phones here which is partly why the telephone socket is left empty. There is nothing in there that anyone wants or needs. Mobile or IP telephony is where most people are reached today.
The people who get these calls on their mobiles only do so because they (or the person holding the number before) signed up for some scam competition where they “allow to receive partner offers ” and how representative is that?
I would not rule out that some polling agencies are cutting corners on the methodologies to still remain in business. Another source of error is that most of the front-line staff are student in call centres where working conditions are “zero fucks given, none taken”, they have to complete a certain number of calls to be paid. So, they will do exactly that – get paid – regardless of the intermediate steps that was assumed.
If this is the case then in theory the effect could be captured by weighing Amazon differently in the sample used to come up with the (apparently not so) “hard data”? I’m not familiar with the measures.
Unskew the polls, so to speak… har har har
One as comment is that amazon is not just a retailer. They derive a large amount of revenue and profits from Web services, which are declining now as competition increases and margins are squeezed.
Amazon has no real competition and that is ridiculous. How did catalogue companies get sidelined ? How did Amazon become a category-killer ? Were other retail businesses asleep ?
You hear about Rakuten but it goes nowhere. There are so few businesses that can make Websites as fluid as Amazon or operate their own payments system. I prefer Amazon Marketplace to EBay and I know many Sellers do too.
Its amazing how terrible some of the other sites are to navigate.
I’ve thought that if Jack Ma could hire some decent web designers, he could beat Amazon on price by shipping direct from China.
I bought a pair of binoculars, made in china, from amazon for 158. Also was offered same product, on same site, at about 100 direct from china. Wondered if amazon makes the same no matter which I pick? Selected the more expensive option, not really sure why.
Anyway, maybe jack is too late, direct shopping from china already on offer.
Gallup appears to measure all consumer spending except “household bills” (utilities?) and car and home purchases. If that is the case, I assume my daily rail commuter pass increase is included in “consumer spending”, as is: increases in healthcare premiums, recent upswing in gasoline prices, uber fares, airline travel/hotels, mobile phone data plans, guitar lessons for the kids, etc etc. It may even include groceris, where the trend is toward more expensive organic.
Given that real wages are flat, new house construction is flat (and thus related furniture/appliance spending is probably flat), and Millenials supposedly prefer to own less stuff and spend more on “experience”, it stands to reason that retail is in such decline. Amazon and other online retailers will inevitably capture that market because of convenience/speed/selection (time has monetary value).
I am concerned that the official real retail sales numbers might not be adequately picking up online retail.
EVEN IF online retail sales are being short counted, the BEA’s Retail and Food Services Sales series has advanced a healthy 5.2% in the trailing 12 months. These are nominal values. Chart:
FRED, the economic data service at the St Louis Fed, adjusts the series for inflation using CPI, to produce a derived series titled Real Retail and Food Services Sales (RRSFS). It advanced 2.7% over the past 12 months.
Usually recessions occur when RRSFS falls near or below zero in the trailing 12 months. That’s happened only once since the 2008-9 recession ended — in Jan 2014. But RRSFS bounced back in Feb 2014, and remains nowhere near recession levels, whether it’s properly picking up online sales or not.
But, as mosler reports, total bank loan growth has fallen hard over past three years, looks to be not enough to counter world wide dollar savings given low, albeit growing, fiscal deficit.
There has been a lot of inflation in food prices over the last three years, particularly in staples like eggs and milk. CPI famously does not do a good job of capturing that. So the deflator may not be high enough. Not sayin’ it would take it to zero, but would probably look less robust.
Amazon is my retailer of last resort these days specifically because I dislike Billionaire Bezos and I don’t want to give him any money. 99% of the time I will research a product on Amazon and then head over to the brand’s website and purchase directly from them. It’s nearly always the same price and they usually provide free shipping too. This way Bezos personally doesn’t get his few pennies from every online purchase I make.
Good for you! I’ve done something similar. I have a family member with two small children, and she posts want lists for them on Amazon. When it’s time to buy birthday or Christmas presents, I look at the lists on Amazon, and then I buy the gifts at a brick & mortar store. The B&M is rarely a mom & pop store, but at least it has local employees.
in addition to above..
(a) Are Goodwill and resale shops sales included in retailer data? Goodwills literally are everywhere in my area (12+ locations)—whereas 10/20 years ago, I never recall seeing a retail Goodwill store.
(b) People are lying (or mis-remembering) to Gallup? Dove-tails nicely w/that article about melancholia from yesterday.
Goodwill charges sales tax, yes? States are quite efficient at monitoring sales tax revenues, since they need the money.
Amazon has started charging sales tax on most orders that it ships itself. An exception is private sellers out-of-state, who usually don’t charge sales tax to Amazon buyers.
Possibly Amazon and some other online retailers casting a wider sales tax net has boosted retail sales data recently, as it becomes more comprehensive in scope.
Yes Goodwill charges sales tax at least in California, I do think some states are more lax about sales tax at thrifts though, but they collect around here.
Stop the Lies!
Goodwill does NOT charge sales tax in California!!
Nor does my local non-profit, Alpha Thrift Store. I have a thrift store affliction that causes me to visit them irregularly (about once every 10 days or so). There is no county in California, that I know of, that requires non-profit thrift store to charge sales tax.
…after reading other comments, I might add:
Goodwill Industries is a large employer of locals (college students, half-way house transitions, cabbies, and other multi-job workers, of all ages) in my well-to-do town. They and the aforementioned Alfa Thrift (disabled children sponsors) are providing a valuable transfer of goods from the well-off to those otherwise; at a reasonable price (while providing employment to many).
“Goodies”, as it’s known locally, is such an efficient market that some locals buy the goods and re-sell it on Ebay and make a living (of whatever kind). Whether any of this sees the light of government statistics is anybodies guess.
In addition to Goodwill, what about eBay? If I should need something, I often look first on eBay for a lightly used item or older stock that is still brand new.
And Craigslist, kijiji and even Freecycle.
I’m old enough to remember department stores on Main Street and the destruction brought by new highways and malls (the latter required the former). Now there is nostalgia for malls. Makes me pause to consider what is coming that will prompt nostalgia for Amazon and Walmart. What slouching beast will be setting up shop?
Walmart aside (Mrs. Rhino viscerally hates them), I agree it makes sense to shop by cost for products manufactured in China, but always happy to seek out locally crafted products.
Malls were always soulless compared to department stores with a culture from restaurant to hardware. Much more interesting than a mall.
Malls also spawned the caricatured Mall Rat. Kids look for inviting spaces to hang out (free to roam around, maybe some cheap food, semblance of security) and malls filled that purpose as Main Streets declined. As malls decline, there is a void in the lives of kids looking for some human contact when they tire of staring at little screens. Atomization of life continues apace, with the prospects of virtual reality and multi-user domains not filling very well that type of void.
If brick and mortar retail is suffering it’s because it’s Crap and Amazon offers a functional alternative.
I went shopping yesterday. Stopped at Bed Bath and Beyond to look at a salt and pepper shaker set I had seen online and wanted an in-person look to assess quality. Product not on the
Shelf at the store.
Went to Home Depot with a list of
3 items. Walked out the door with 1 item.
Brick and mortar retail is dying because it’s an inefficient business model in a digital world. In order to maximize efficiency the stores only carry the most popular items that they know they can sell. Carrying a comprehensive inventory across a large number of stores is inefficient for them. The model only worked when customers had no alternative warehouse to shop at. Brick and mortar simply cannot compete with the inventory depth of online.
+1000
And that’s exactly why people shop online: stores like Bed Bath and Beyond, that’s the whole story right there. All cheap Chinese crap all the time (occasionally I get something there, once in a while it’s not even Chinese, even made in the U.S.A.! But that is the exception).
Brick and mortar simply cannot compete with the inventory depth of online.
Exactly. Some online lighting retailers carry over 6,000 different fixtures. No way this many could be stocked locally, even in a large city.
Meanwhile, go into a brick-and-mortar supermarket or drugstore or hardware store, and observe the crapification produced by useless product differentiation. Everything from coffee to vitamins to NSAIDs to thread locking compound now comes in a dozen different flavors, colors, package sizes and grades, forcing the consumer to spend 5 or 10 minutes in front of a retail display sorting out which one to choose.
Often vital specifications are not printed on the external package, whereas they are easily accessible online, along with user reviews and explanations.
Such wasted time in a store is better spent in one’s own living room, than in a commercial venue with noxious muzak playing, as they try to scan your face, your irises, your chip card and your phone for psychographic data.
Per your last paragraph, Jim. Sure, do it online where they already know your “data” cause you gave it to them,freely.
I pay cash, for as long as it lasts.
Art Eclectic, stopping at a retail store to “assess quality”, and then shopping price online is one of the major reasons you are not finding what you want at the store. Indeed, brick and mortar cannot stay in business if they are an unpaid showroom for online retailers! So, when they go out of business, and all shopping is online, where will you go to “assess quality”? You will pay to ship one item to you, and try it, and pay again to return it if unsuitable? I would submit that to be the Inefficient business model, not the retailer.
Not to single you out, of course, we all do it. But the alternative isn’t really an alternative, it will involve buying everything sight unseen. Just sayin’ (as the kids say).
They carry so little inventory that everything becomes special order at a premium price… then I prefer spending those extra dollars in the specialized
store or shopping online.
I too mourn the loss of Main Street and all those small businesses where the clerks knew who you were and were friendly and were most likely your neighbors. But loss of the malls? Shopping in overprices stores with untrained or snotty clerks? No I don’t mourn the loss of them. I figure it’s just karma….
Shopping in malls only make sense if you want the whole day shopping experience, well maybe if you are a particularly materialistic 14 year old girl.
But if your not who wants to spend all day going to dozens of stores? Is this anyone’s idea of a fun way to spend one’s minimal leisure time? What would be nice is to go to a store, find what you need and hopefully it’s not junk that will fall apart quickly, buy it and get out.
I still know people who spend the entire week shopping. They have a routine of certain stores they visit on certain days.
They are very much a dying breed.
Is there some separate pool of labor used for mall stores? Those “snotty,untrained” clerks are drawn from the ranks of your neighbors, as before, just without any pretense of job security or fair wage.
Overpriced? You bet! Malls are hugely expensive use of real estate, basically climate controlling an entire shopping district, in brand new buildings, purpose-built, on property which becomes more pricey as more retail moves into the area. A self licking cone of a sort. When a company prefers to hire 4 clerks at 10 hrs. per week, rather than 1 clerk at fulltime, how are they to become well trained?
I have family who have bought into the Amazon ” sticky button” paradigm, who are paying triple the price I pay for things like laundry detergent, trash bags,paper towels, and such. Not to mention the insanity of all those trucks delivering one or two items at a time. Cheaper? Not from where I sit.
There will never be a scenario in which shipping one or two items at time, all over the world, is cheaper than consolidation of shipments to central locations (retail stores). Somewhere, someone is subsidizing your convenience.
As a person of color, I don’t miss being watched like a criminal suspect when browsing goods ( and I tend to do it rather deliberately), or being nagged multiple times for help as if they wanted you to desperately buy something rather than steal it.
However, the unobtrusive girl watching wasn’t bad.
I think online sales are increasing and brick-and-mortar sales are decreasing for a number of reasons. Retailers have adopted many managing mantras, including Just-in-Time inventories tied to global supply chains, resulting in smaller inventories or inventory disruptions. Much of the inventory they do sell has built-in obsolescence (aka “crappification”) as compared to older equipment. And retailers have a major handicap in that all real estate was essentially propped up by the Federal Reserve, in order to keep the banks running, which essentially acts as higher overhead to rent or buy retail space, which is reflected in consumer prices. Many retailers also appear to have a less-diverse inventory because they have identified and dropped certain low-selling items.
The advent of the internet has also created a major shift not only in consumer behavior that hurts brick-and-mortar retailers, but in how we gather useful information, which also affects consumer behavior, as I’ll describe below.
So how do these trends manifest as a consumer experience? You go to a retailer to buy something, but they don’t have it because they just sold the last item because of low inventory. Online retailer to the rescue! Or the model they have is poorly made, and the customer balks at the novelty of inexpensive crap that breaks after one use. Online retailer to the rescue! Or the retailer has overestimated the importance of convenience and has priced their goods (un)accordingly: Witness Radio Shack’s $20 RCA stereo hookup wires to connect, say, a CD player to a stereo receiver–probably 99 cents on Amazon or even less from a Hong Kong supplier on eBay. Or the price of the item is substantially higher than what is online because we all have to pay the hidden tax to big banks that the government orchestrated due to inflated real estate prices. Online retailer to the rescue!
Another phenomenon is useful information on the internet. Whereas if your washing machine clunked out in 1990, you could pay a repair person as much to fix it as it would cost to buy a new washing machine. Now you can go on YouTube and find out how to fix it, buy the parts at a local appliance repair part center (alternatively, Online Retailer to the Rescue!) and have it running for $20-$40. There are all sorts of examples of this; a lot of people find or buy good-quality used equipment secondhand, from a thrift shop, or eBay, replace a bearing or a belt, and enjoy a longer-lasting and better-made kitchen mixer/drill press/desk fan/stereo or whatever. I’m not sure this is tracked accurately in any meaningful way; it’s not illicit “black market” or even really “gray market,” but there’s no way to account for this trade other than in parts I suppose. The phenomenon is also related to the “hacker/maker” community. This has not applied yet as much to technology, but given the current processor speeds, I see no reason why it shouldn’t.
At any rate most of these instances completely bypass brick-and-mortar retailers.
How much does a vibrant small business/mom-and-pop environment depend on robust public transportation? At least from an end user/psychological perspective?
I can cross clogged roads that lead to dismal parking lots and grim strip mall/big box stores, or simply shop from my home and avoid the misery that is retail shopping in a sprawling suburban setting.
It doesn’t make sense at all from a solidarity perspective, but retail shopping is a major tax on my time and well being.
I would love to live in a walkable city.
Retailers losing revenue because they are losing market share, and Amazon ( with Zara & H&M ) increasing revenues because they are gaining market share are opposite sides of the same equation which does not tell you the change in consumer spending. Netting the revenue gains of Amazon, Inditex/Zara, H&M ( and other market share gainers ), against the revenue losses of all the other retailers will give a clearer picture if revenue share is being transferred in a growing or declining retail market.
This video from L2Inc’s Professor Scott Galloway has been making the rounds. Just short of 25 minutes, but well worth the view IMO.
A trillion dollar company, because it’s the new paradigm. No profits is better than profits.
Agree. He says interesting things about brand destruction and wrecking the relationship between manufacturers and conventional retail. Expecting this continuous erosion of profit to be destructive doesn’t make the future very nice, where taken to some kind of endpoint the only guy with any money is Bezos.
I think it will blow before we get to Amazon = a trillion.
I go by personal experience. I don’t order much on line unless I can’t find it locally. And by locally I mean within 40 miles, since I live in a rural area. When I have to order on-line supplies for my business, I am often outraged by the high cost of shipping and handling, which deeply cuts into my profits. So I try to find companies that will ship by regular post office. Also, I have only two friends who do weekly on-line shopping, but they have heavy workloads and higher incomes than I do (and one actually orders her weekly groceries this way, which I refuse to do).
Re all the statistics: I don’t think there’s any way to factor in the respondents’ location, income, and needs, and those variables do matter.
In almost all sectors now…retail, computing, pharmaceuticals, banks, there is a top heavy model where a small group of companies dominate almost every sector. There are various reasons for this, but it is not helped by well meaning politicians interfering in the market through regulation and tax policy, and wage subsidy for certain firms. Walmart gets govt money to subsides the wages it pays its staff. While this is well meaning to improve the lot of the low paid workers it has a knock on effect.
Why should tax payers subsidy Walmart? The money should be coming out of the Walton families fortune. And if they won’t pay their workers more money perhaps that may make it easier for mum and pop stores to compete. After all they don’t get the same help paying their staff. Walmart may find it more difficult to retain and keep staff. Endless regulations also don’t help small business compete. It’s well known inside the belt way and in the EU that the big boys like regulations, and often lobby behind the scenes to help make it hard for their smaller competitors.
And then we come to the biggest interference of all. The federal reserve, and the ECB and the ability to crate endless amounts of free money for the elites. How do you think these companies are able to stay afloat for years as investors throw endless amounts of money at these companies even though they are not making much profit? Amazon has returned very poor amounts back to share holders, and its owner’s greatest skill has been to keep convincing his shareholders to keep piling more and more freshly printed fiat into keeping the company going. All this endless free money also encourages endless merges and acquisitions which reduces competition for the customer. No so easy to take over your competitors if you have to actually have the money to buy them out.
A great example of this crazy market is the car company Tesla. The Company burned over $1.5 billion in in 2016. This was provided by cheap credit and equity markets which ponied over a net $2.7 billion to the Company in 2016. In addition Telsa was given huge tax advantages for the first 200,000 vehicles. In effect Telsa’s sales are being subsided by the U.S. Tax payer. The company also operates a buyback scheme where it guarantees the resale value on its sales up to 2016. That could be a liability of some $2-3 billion in the future. Comically Wall Street values Telsa at $5 billion more than Ford. Yet Ford sold 2.5million cars last year compared to Telsa’s 79 thousand. Now obviously investors are betting on new technology eventually coming good, and replacing the oil fired engine. But without all the smoke and mirrors of funny money this could not continue for very long.
> But without all the smoke and mirrors of funny money this could not continue for very long.
Funny money is available in infinite supply, so, in theory it could go on for infinity. In reality, there will be some kind of dislocation, a few days of recognition, and then panic.
What when and how it happens is what makes things interesting. I’m long bunker futures.
Actually it will end when the last current top 15% with money get squeezed out… it will start with pension plan failures… which are financing all these bad companies.
Tesla is a Ponzi. They will never produce enough cars to pay the debt as they are competing in luxury sport car segment — the same as BMW and eventually BMW will eat their lunch.
they also have technical problems with their cars. Just look at YouTube (search for Tesla car problems).
What people do not realize is the Amazon is a surveillance company too. In some way they are even more dangerous than Google: if you are a “Prime” customer you have huge dossier on you.
If you buy “almost everything” on Amazon you provide pretty complete picture of your preferences and your activities in time. Those records are never erased, even formally, like is possible in Google. That’s pretty disgusting to be under microscope.
Of cause, you can try to get amazon “off-track” by browsing items that in no way represent you shopping “preferences” (for a man that might be cookware, woman clothing and jewelry ;-) . Results are pretty interesting if you try.
So using variety of Internet stores is just a common sense. Wal Mart is an obvious alternative (pick-up in stores is pretty convenient). Buy.com is another.
If you buy electronics amazon prices are never good. You usually can find a better deals either directly (from Dell) or specialized stores (Fry, etc)