Traditional retail is under serious threat. People are gravitating towards alternatives like Amazon for one primary reason…to buy more for less.
Amazon is high-volume and low-margin, and it doesn’t have the property overheads that brick-and-mortar retailers do. But life is never one-dimensional, There are other factors at play. Factors that could cost yield-starved investors serious money.
Warren Buffett believes in America’s future but seems more doubtful about that of Walmart and other traditional retailers. As recently as last summer, Buffett’s holdings in Walmart were worth $3 billion, and are now down to less than $100 million. He started investing in the company in 2005.
‘Buffett himself seemed to take a dimmer view of traditional retail’s prospects at Berkshire’s annual meeting last year when he said of Amazon, “It is a big, big force and it has already disrupted plenty of people and it will disrupt more,” adding that many companies “have not figured the way to either participate in it, or to counter it.”
According to the Business Insider, ‘Nearly every major department store, including Macy’s, Kohl’s, Walmart, and Sears, have collectively closed hundreds of stores over the last couple years to try and stem losses from unprofitable stores and the rise of ecommerce. But the closures are far from over.
‘Macy’s has already said that it’s planning to close 100 stores, or about 15% of its fleet, in 2017. Sears is shuttering at least 30 Sears and Kmart by April, and additional closures are expected to be announced soon. CVS also said that it’s planning to shutdown 70 locations.
‘Mall stores like Aeropostale, which filed for bankruptcy in May, American Eagle, Chicos, Finish Line, Men’s Wearhouse, and The Children’s Place are also in the midst of multi-year plans to close stores.
‘Many more announcements like these are expected in the coming months.’
Aussie retailers are next in the firing line… The Australian, Fears build as Amazon seeks warehouses. The group’s entry could cost local retailers as much as $4 billion in sales.