I stumbled across this article in my Flipboard viewing this morning titled “Are we
Witnessing the Death of the Big Box Store?” on Time business. The article was inspired by a 25% drop in net income for Best Buy in its most recent quarter, perhaps a sign that “software is eating” their world. More specifically, Amazon:
So what’s behind a store like Best Buy’s headlong decline? One word: Amazon. Specialty big-box stores like Best Buy have made a killing the past 20 years by offering a huge selection of products at low prices. But there is no way the firm can compete with an Internet retailer like Amazon on those measures. Even worse for Best Buy is the phenomenon of “showrooming,” whereby shoppers check out an item in a store and then buy it through an online competitor for a lower price. This is particularly frustrating for brick-and-mortar stores because it takes their one tangible advantage to online retailers — the in-store experience — and turns it into a way for their competitors to steal market share.
I’ve been thinking about this for a long time, really ever since I upgraded to Amazon Prime (a little over a year ago). There’s just something magical about the Amazon Prime experience, and it’s even more necessary amazing while living in NYC. Before I upgraded to prime I was definitely an occasional but not heavy Amazon buyer, but since the upgrade my whole shopping patterns have changed. Toilet paper? Amazon. Razors? Amazon. TV? Amazon. Coffee? Snacks? Green tea? Batteries? Yep, yep, yep. I can have it shipped to my door for free sometimes as quickly as a day (Even though Prime’s promise is 2 days free, one day for $3.99). I’ve even done my fair share of “showrooming,” although not to scoop the lowest price but because my local option had run out of stock. What was I buying? Plant fertilizer. I went to my local hardware store and they had just run out, so I pulled out my phone, and within a minute it was on the way, shipped for free, cheaper than the hardware store anyway. What happens as more and more people live in the “Prime world?”
There are still a lot of things I shop for “locally,” with food being the most obvious and frequent. And I think there are many things that simply can’t be “primed,” (appliances, some clothing, etc), but clearly there are a lot of things that can and will be. So what happens to Best Buy (who I think is in serious danger in current model)? What happens to Ace Hardware? I would bet on those businesses being severely limited in 10 years, a result of being “primed.” What happens to the millions of square footage that is no longer needed when Amazon starts to really eat these businesses? Could they ever be returned to farmland? Or their natural habit? I was at the farmers market last weekend. One of those farms had a sign up that read “Once farmland is developed, it never goes back. Have you ever seen a mall turned into a farm?” No, I haven’t, but maybe I will.
- Are Big-Box Stores Crumbling? (huffingtonpost.com)