Retailers Affected by More Than Move Toward Online Shopping

By Alex Batty, MHI Marketing Communications Coordinator |@mhi_alex

We end up touching on Amazon pretty regularly at the MHI Blog headquarters – that’s because what they are doing tends to set the standard for supply chain delivery. Whether we like it or not.

Now, I happen to like Amazon — I pay for a Prime subscription after all — and I tend to price compare there first. Sometimes my beloved Walmart is cheaper, and that makes my frugal heart sing. But one of the big draws for introverted me is the fact that it shows up at my door. I can order a 24in clamp, pens, the This Mortal Coil novel, a new raincoat (which they will size exchange for free with Prime), and some new pans for my kitchen, and I don’t have fight crowds at WallyWorld or drag my sorry carcass around the mall with 20 shopping bags.

I can see how Amazon is not retailers’ favorite.

However, it is not the sole cause of evil in the world. There was recently an article on CNBC explaining other causes for retail distress. (Yes, we’re recapping. This is good to know. It’s fine. You’re fine. We’re all fine.)

While in-store traffic is dropping due to a shift toward more online shopping, and yes, Amazon is a major culprit, the Commerce Department is reporting that 86% of retail sales are still made in-store.

Additionally, the things people want to buy are changing. Clothing in particular has taken a hit as consumers are saving money to spend on experiences like travel, streaming, and home improvement, while expenses like health care and education continue to rise.

Recession concessions, like lower rent for shopping centers or loans rather than bankruptcy are still weighing down retailers. The article also talked about new bankruptcy laws and private equity debt… which I understood very little of because I took exactly zero business classes in college, but you can read their explanations in the article.

While companies like Amazon, or startups like Instacart, are accelerating supply chain timelines and raising consumers’ expectations, it’s not the only factor we have to contend with. Our current economy is still feeling the effects of the recession and both retailers and consumers are changing the way they spend money because of that, and supply chain has to adapt to continue pushing forward.