Amazon is annihilating the Department Store faster than you think with 80 million prime subscribers: 4 charts showing the destruction of the department store.

If you enjoy the process of shopping at department stores you may want to get it out of your system sooner rather than later.  Forget about the fact that the US has built a ridiculous amount of mall space thinking that Americans were perpetually going to only buy in-person in cavernous florescent light stores.  Amazon has set the new model of shopping and how can you beat shopping in your pajamas?  After recently purchasing a big piece of furniture online, I can see why department stores are in big trouble.  The recent list of retail bankruptcies are only going to grow larger.  People have made a conscious decision and are voting with their wallets online.  The word of the day is “disruption” and it is happening much more quickly than expected.  When you look at these three charts you can see that retail is in deep trouble.

Online is crushing the department store

Just like Blockbuster failed to see Netflix changing the way people view shows and movies, most retail stores failed to see how Amazon would shape the way Americans shop.  We are a consumption based society.  That is the fuel that keeps this ship moving.

Online sales which once were thought of as a tiny sliver of the market are now crushing the daylights out of in-person retail sales:

US-retail-department-stores-v-online-2017-Q1

Chart #1 – Bye bye department store

Ecommerce sales are now over $100 billion on a quarterly basis.  Department store sales have been on a steady declining trajectory since 2000 and now have fallen below $40 billion on a quarterly basis.  This is bad.  It is bad for commercial real estate.  It is also bad for those retail shops that simply cannot compete with the logistical power that Amazon now carries.

Chart #2 – This is not a temporary change

dept store sales

The destruction here is only going to accelerate.  This is going viral.  People are just not shopping in department stores like they once did.  This is crushing sales as you can see above.  Of course you now have places like Target and Wal-Mart that have sizable ecommerce positions.  Yet this completely crushes the idea that this change is temporary.  This is the way things are heading and they are moving in that direction fast.

Chart #3 – One ecommerce store in Amazon

amazon dept store

Amazon is the big powerhouse here.  Take a look at the above chart.  Amazon is singlehandedly changing the way people shop and is completely disrupting the department store industry.  Amazon is nimble and their logistics are incredible.  They are a logistics and supply chain management company.  They do this the best. So it is going to be increasingly difficult for other retailers to compete in this space short of them producing something better.

Product developers used to fight hard to get their products on the shelves of say Wal-Mart.  Now you can go directly online to Amazon.  This type of disruption was seen with YouTube and self-made videos and obviously with the ability of bloggers to serve as an alternative to the mainstream media.

#4 – Amazon is growing like a beast

amazon prime members to date

amazon prime members

Amazon has gone viral in their prime members hitting 80 million.  They were in single digits just in 2013.  This is now viewed by many as a utility like Netflix.  Charts like this change entire industries.

Ultimately people are making a statement in the way they vote with their wallets.  If you enjoy going in-person to shop at a department store, you may want to go soon or expect to see your favorite store standing next to dinosaur fossils in the museum.

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10 Comments on this post

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  1. chuck said:

    Take some of the old malls, pull out the walls and get 10 failing retailers to put all their goods, creating an mall-a-thon or something like a walk-in amazon. If the prices are competitive, I think it could compete by making it a fun place to visit with entertainment, restaurants, etc. People still need to get out.

    May 15th, 2017 at 12:03 pm
  2. Donald Canaday said:

    There is some talk that Amazon would buy BJ Wholesale Club.Amazon revamp with some two hundred stores and put one million level skill out of work and expand to 2,000 Amazon brick and mortar stores.If you want to see the type of self service experience,that beta test,like in Seattle,Washington.go to ww.amazon.com/go.

    May 15th, 2017 at 3:39 pm
  3. Trump said:

    Looks like Walmart didn’t run all the stores out of business after all. It was that evil looking troll Jeff Bezos and his Amazon. Bezos owns the Fake News Washington Post. #boycottAmazon

    May 15th, 2017 at 9:08 pm
  4. bob Smith said:

    Why should I shop at department stores when I must drive there, spend time and money on gas, pay higher prices, not be able to read any reviews to help make up my mind, deal with rude sales people, and then after all of that–they don’t have my size?

    May 16th, 2017 at 12:31 am
  5. Digby Green said:

    Really,
    So why are the malls in New Zealand full of hoppers and eaters!?

    People like to go out and eat.

    Department stores are not the only type of b&m store.

    May 16th, 2017 at 1:43 am
  6. Tragoudi Arpa said:

    The greatest problem with brick and mortar stores is their tendency to stock only the lowest common denominator merchandise. If you want anything of higher quality, or professional level goods such as books, artists quality materials, speciality hobby or craft materials and tools, you mostly won’t find them at the local stores and therefore are forced to go online to find them. Of course, the local stores say they will special order things for you, but there aren’t many reasons to do that when you can go online and order for yourself.

    May 16th, 2017 at 5:42 am
  7. Dan said:

    This trend has already created some real problems. Online is great if you can wait. But what will you do for that video cable adapter when Best Buy goes out of business? Or the emergency hot water hose for the washer that just burst. Forget about True Value, they folded years ago. The local Walmart has everything under the sun except the part you actually need. I’d have to drive an hour to the nearest Lowes or Home Depot unless they go under also. If Amazon is going to become the company store they will need at least a small physical presence, or there will be a niche that will be filled by specialists and tradesmen like plumbers and computer repairmen.

    May 16th, 2017 at 8:20 am
  8. ed said:

    OK, today, from the comfort of my chair in front of the computer, I ordered some parts for my Stihl weedeater, and some parts for my Club Car golf cart from Amazon.

    Now I could have driven to town (20min), then gone to a Stihl dealer, and a golf cart dealer….neither of which likely had the parts in stock, but would have ordered them (online, no doubt), meaning I’d have to drive back to town another day to pick them up…paying tax, shipping, and a hefty markup.

    Or I could ‘get-er-done’ in 5 minutes online myself, and have them delivered to my door, free shipping, no tax.

    No brainer to me.

    May 16th, 2017 at 6:05 pm
  9. musket said:

    Malls turned into the living rooms of the great unwashed about 30 years ago and only got worse. This started the slide and the internet only assisted the malls plunge lower and much faster. I do not shop much but I always want to look at the goods first….especially clothes.

    May 19th, 2017 at 5:31 am
  10. Ame said:

    UPS and other shippers like them are doing very well.

    I noticed the television shopping channel, QVC has added two more channels. I wonder when Amazon will be competing with them for the television shopper? Amazon TV sounds like a good idea.

    We purchase shoes from Zappos. The offer free shipping and free returns and the price of the shoes is nearly always the same or less than other online retailers as well as b&m stores. They blow Amazon out of the water for shoes, imo. since I have a hard-to-fit foot. And they have videos of most of the shoes to describe them and you can see them on a walking model.

    May 21st, 2017 at 1:06 pm

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