Good day,
In retrospect, Toys R Us filing for bankruptcy early last year signaled the beginning of the end of traditional brick-and-mortar storefronts that we know of. Ecommerce has truly taken the U.S. market by storm, consistently showing 20% annual growth over this decade, and consequently eating into the market share of concrete storefronts that do not have the wherewithal or the reach that Amazon commands.
Then again, what we are witnessing is just the tip of the iceberg. Its been only about fifty days into 2019, and 2,187 stores have already indicated that they would shut down this year, with stores from popular chains like Gymboree, J.C. Penney, Charlotte Russe, and Ascena Retail in the picture. Coresight Research, a data analytics company, expects yet another wave of store closures this year that is set to hit shopping centers and malls, crippled by ecommerce to the point of no return. Analysts believe that the U.S. has a lot more storefronts per person than other countries, which is also playing a part in the record number of closures this year.
Did you know?
U.S. retail sales tumbled by 1.2 percent in December 2018, the largest decline recorded since September 2009 when the economy was emerging from recession.
Quotable:
“As Jeff Bezos showed with Amazon that as long as you have a good business plan and continue to grow, then you can be slower about the profits early on. For these companies, as long as they maintain the growth, the differentiation, and continue to break away from their peers, then I think shareholders will be fine on them.”
– John Chambers, former Cisco CEO, on Uber and Lyft’s future as public companies
In other news:
Investors are pouring money into Latin America’s logistics and shipping businesses
Freight shipping startups are mushrooming at a time when shipping and logistics business in Latin America is booming thanks to increasing trade coming from China. (TechCrunch)
Waymo’s self-driving cars needed a lot less human intervention in 2018
The California DMV has published manufacturers’ reports for autonomous vehicle disengagements (moments when a human had to intervene), and Waymo’s disengagement rate fell in 2018 to 0.09 for every 1,000 driverless miles. (Engadget)
Inside the box: subscription e-commerce startups show resilience
FabFitFun, the category’s newest billion-dollar company, shows venture investors’ renewed confidence in an alternative retail channel. (WSJ)
Hapag Lloyd CEO: trade spats could dampen shipping growth
An escalation of tariff wars between China and the United States could dampen growth in international container shipping as operators pre-emptively brought forward business in the second half of last year. (Reuters)
Lime gets hope for future scooter bids in San Francisco
Lime’s rejection for an e-scooter trial in San Francisco was fair, but the company should be considered for another chance in April, a SF Municipal Transportation Agency hearing officer wrote in a decision released Tuesday. (San Francisco Chronicle)
Final thoughts:
After its acquisition of Whole Foods in 2017, Amazon had slashed prices to improve the company’s public perception from being looked at as an expensive retail chain. However, the prices are climbing up now as suppliers have increased the costs of packaging, ingredients, and transportation costs on hundreds of products. Whole Foods in an email last December, had explained that this was due to inflation and that the separate price increases followed the expiration of annual contracts that had dictated the company to keep the prices of nearly 700 products under control. Whole Foods has indicated that these contracts would not be renewed and that the increase in prices accounts for hundreds of thousands of dollars in added weekly revenue for the grocery chain.
Hammer down everyone!