Close your eyes. Imagine the American town. One can think of big shiny malls with parking lots larger than football fields or perhaps well-kept high streets where friendly neighbors are doing their daily shopping. Now open your eyes. This movie-like version of Americana has never been accurate in describing life in the United States, yet nowadays it is even less than accurate. A big transformation in American towns and in the lifestyles of its residents is reshaping the cliché into something new. Notably, Americans are changing their shopping habits in a commercial surge whose leader is no else but the internet giant Amazon.
In recent years, more and more shoppers buy their favorite clothes, appliances, groceries and digital devices via e-commerce websites that offer them the best deals on a daily basis. Tired of walking through endless aisles, comparing prices relentlessly, knowing that you are definitely being ripped off? Have no worries. The shopping experience online is customized, tailored to your own preferences, easily at your reach. If you’re a regular Amazon shopper (and you know if you are one), the company probably knows more about your purchasing inclinations than your own mom. Definitely more than Macy’s, Sears, and any other retail giant who struggles to stay above water and attract shoppers. Over the past few years, we have been witnessing the ongoing closure of numerous chain stores and companies. You might have heard the Toys R Us filed for bankruptcy a while ago, joining other famous companies such as RadioShack, Rue21, Aerosoles and The Limited. Giant retailers are closing stores all across America due to declining sales: J. C. Penny is closing dozens of stores this year to accommodate for changing consumer habits, alongside Abercrombie & Fitch, Macy’s, Gap and Kmart. And all of this happened only in the past year!
In this mystery of the disappearing retailers, Amazon is considered a prime suspect. During the spectacular rise of e-commerce, the online giant has become a term by its own rights, another way of saying online shopping. First, the numbers. In 2015, Amazon sold $55.6 billion worth of goods in the United States alone, operating 75 million square feet of distribution space and more than 110,000 employees. Approximately 50% percent of dollars spent online go directly into Amazon’s virtual hands. This spectacular boom is changing towns all across America: giant malls are stranded, parking lots in shopping centers are empty, and employees are losing their jobs or forced to work part-time. It is fair to add that economists and business experts have been warning that the US is “over-retailed” for quite some time. Simply put, there are too many retail stores, and not enough demand to satisfy their existence. According to this article, in 2015 there were approximately 25 square feet of retail space per capita in the United States, compared to 2.5 square feet per capita in Europe. Department stores and other commercial giants occupy millions of square feet across the US, in malls, shopping centers, and on high streets. In this new internet-based reality, real-estate becomes a disadvantage – a prime example is Sears, whose real estate holdings are worth more than the value of the company itself. The internet-era customers do not want to be one a million customers roaming through gigantic halls of mass merchandise, and they expect personalized marketing that appeals to their uniqueness. Thus, gigantic stores and malls may seem redundant.
Back to Amazon. The company’s massive infrastructure of warehouses (more than 50,000!) and online presence has given the company an indisputable advantage almost in every retail sector. Their web services provide the computing backbone for leading companies and government agencies and their distribution systems dominate package delivery in America. The decline in sales of traditional retailers implies lower tax revenues and immediate fiscal consequences. And do not forget human capital – employees suddenly feel unneeded when their jobs are being done by fancy drones. Workers in “traditional” retail stores and local businesses find it harder to earn commission wages and struggle to maintain their working statuses as companies cut down costs and shut down dozens of locations. It was estimated that in 2015, Amazon’s net job impact in the US was the loss of around 148,000 jobs. Needless to say, numbers like these might be misleading within a narrow context of the economy.
And perhaps we’re being a bit too bleak. Amazon’s emergence has had some beneficial effects on American towns. For example, Tracy, California. Located in the traditionally agricultural area of Central Valley, California, citizens of Tracy have started to witness more and more Amazon warehouses clustering in the eastern and western sides of town. Tracy citizens are now facing a larger number of job opportunities emerging from the e-commerce sector, and the widespread boom attracts new business to the area. A job in an e-commerce warehouse usually pays more than a regular retail job (about $12 an hour), and arguably requires more technical skills. E-commerce companies have been moving their distribution and shipping centers to strategic locations in the outskirts of large cities, such as central New Jersey, changing employment and commerce in both agricultural and industrialized areas.
Is it for the best, though? Amazon is frequently voted as one of the worst retail-sector companies to work for. The working conditions in the warehouses gained a somewhat notorious reputation with complaints about low wages, negligence, and overall unpleasant treatment. Numerous organizations such as this have been calling for contractionary measures to cut back Amazon’s impact on local communities, issuing reports on Amazon’s aggressive entrance into so many sectors of the economy. It seems that some people are fighting back in the battle against this giant digital windmill, however, the revolution has already begun. They might be too late.