© 2019 by Saroj Investments, LLC. 

8400+ Retail Stores have closed so far in 2017

09.19.2017

 

8400+ retail stores have closed so far in 2017. This is the highest number of stores closed ever. Today, a ton of retail stores are threatened by Amazon and their sales are impacted by the their amazing presence in the e-commerce(and m-commerce)

 Source Data: News articles, Credit Suisse

 

Wall Street takes Amazon's presence very seriously. For example : In January 2017, Amazon announced that they would start selling auto parts. Since then, the stocks of 2 leaders in this industry (AutoZone and Advance Auto Parts) have been beaten badly and so far this year they are are 40% and more down. The down turn of these stocks was not just because of Amazon but it definitely added a lot of fuel to the fire.

 

 

At this point, different companies are dealing with the threat of Amazon. Giants like Walmart and Costco have a great brand value and they have decided to go head-on with Amazon. Like Walmart partnering with google to increase their online presence and Costco relying their membership loyalty to keep growing. But relatively smaller companies are trying different strategies to deal with this -

1) Lets make our product better : Some companies started taking the route of building competitive apps and website. Their thought is if we have a competitive app we could probably attract the folks to buy stuff from us instead of Amazon. Good thought but extremely hard to fight the perception and price of Amazon. Focus on their brand would be key. 

2) If we cannot beat them let's join them: Then there are companies like Nike who have decided to partner with Amazon and sell their products on Amazon. Why spent the energy in fighting? Let's spend that energy in strengthening our brand and use Amazon as a marketing channel. Good strategy? 

3) Believe in yourself and don't add unnecessary pressure: Rumors are that Nordstrom is planning to go private. To me this is an amazing strategy. What do we tell our kids when they are fighting a challenge - "Believe in yourself". This is exactly what Nordstrom decided to do - Taking the pressure off by going private, believing in themselves (and their strategies) and focusing on delivering it to their customer. The retail market is at a point when any rumor or any Amazon's announcements of strategies would just cause emotional response on stock price and thus negatively impacting the companies performance. So what's the point of being a publicly traded company. What's the impact if they stay public? This is how - cutting down the stock price means increased pressure of growth and profit, which means being forced to make decisions like sacrificing employees and sacrificing quality. All of that causes loosing brand value which will ultimately cause disaster. 

 

The fear of Amazon is already threat to the retail market and many of them are already strategizing on how to compete with Amazon. But, Nordstrom's approach has made the most sense to me.

 

In 2008, 6000+ stores were closed compared to 8400+ stores closed in 2017 so far. So, in respect to retail stores we are in the worst state ever and it's time for these retail companies to think outside the box(like Nordstrom) to fight the fear of Amazon.

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