Spending at non-store retailers shot up 10.7 percent from a year ago
Online shopping is reaching such a critical mass with American households that many of the icons of the traditional mall —from Macy’s to The Gap and J.C. Penney — face an increasingly uncertain future.
A government report Friday suggested a modestly healthy consumer, with retail sales up 1.3 percent in April. Americans are eating out more at restaurants. They’re buying more cars. But the main beneficiaries of spending in the past year have been Amazon, eBay and other internet behemoths.
“Online is cannibalizing the store business”
Spending at these non-store retailers shot up 10.7 percent from a year ago, the government said in a week when earnings reports showed disturbing drop-offs at Macy’s, Kohl’s, Nordstrom and J.C. Penney.
Shoppers who once crowded malls are now ordering on phones, computers and tablets, siphoning sales from physical stores, which face growing pressure to reinvent their businesses.
“Online is cannibalizing the store business,” said Marshal Cohen, chief industry analyst at the NPD Group.
The magnitude of the change may be just beginning to intensify. Online shopping has attuned customers to focusing on price and hunting for the best bargains, thereby shrinking profit margins at many stores.
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Retailers have responded by shuttering stores to cut costs, leaving more shopping malls and plazas empty. The result has been a painful upheaval in an industry that employs 15.9 million people.
Online, in the meantime, has been catching up to the general merchandise stores that range from Wal-Mart to Nieman Marcus.
Back in 2000, for every dollar spent at physical stores, just 30 cents were spent online and at mail-order houses, according to government figures. Now, the online category makes up nearly 70 cents for every dollar spent at general merchandise stores.
“We have yet to learn the ramifications of just how paramount these shifts in…” Read the rest of the article.