Walmart vs Amazon

‘Skull Island:’ The Epic Battle Between Walmart And Amazon

The epic battle between Walmart and Amazon is threatening to turn traditional retail industry into a ‘skull island,’ filled with shattered neighborhood stores, changing a decades old culture of shopping experience.

Once, neighborhood stores were an integral part of American traditional life, places to spend time outside home on weekends and evenings, browsing new merchandise and running into friends and neighbors.

Meanwhile, neighborhood stores offered hundreds of thousands of jobs to local employees, and sales tax revenues to local governments.

Simply put, neighborhood stores provided the kind of shopping experience that nurtured a sense of community across America, which can explain the affinity for these types of stores shared by Americans.

Then came the big gorilla of bricks-and-mortar retailing, Walmart.

Its large stores and everyday low prices were too much for smaller neighborhood stores and supermarkets. Many closed their doors soon after Wal-Mart invaded their territory.

That’s how Wal-Mart ended with close to a half-trillion dollars in sales, double the size of smaller country economies.

But Wal-Mart’s victory didn’t last long. Its business model was soon challenged by Amazon, the big gorilla of on-line retailing. Its remote location warehouses, prompt and expedient delivery, and razor-thin margins have given Amazon a price advantage over Wal-Mart. 

Worse, the proliferation of smartphone and tablets turned Wal-Mart into a storefront for Amazon.

But Walmart has been fighting back by expanding aggressively into Amazon space, forging the right partnerships and amassing the right talent and resources to compete effectively against the e-commerce leader.

That means more price wars, more shopping on-line, and more store closures.

In 2017 alone, RadioShack is planning to close 550 out of 1500 stores, Payless Shoes is closing 400 out of 2600, Limited 250 stores, and Bebe 180—see table.

Retail Store Closures In 2017

Company

Store Closures

RadioShack

550/1500

Payless Shoes

400/2600

Rue21

400/1100

The Limited

250

Bebe

180

Wet Seal

170

Crocs

160/560

JCPenney

138/1000

American Apparel

110

Kmart

109/735

Hhgegg

88/220

Sears

41/695

Source: Wall Street Journal, 4/23/2017

Store closures have spread even in upscale communities like Long Island.

“Long Islanders have seen major retailers file for bankruptcy in the last few years, bringing an end to well-known chains such as sporting goods retailer Sports Authority, apparel retailer The Limited, teen retailer Wet Seal, and Pathmark and Waldbaum’s supermarkets,” writes Newsday’s Aisha Al-Muslim.  

And rising interest rates are expected to make things worse, as heavily indebted retail chains will find it difficult to re-finance commercial mortgages.

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