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Trading Lessons

Brick and Mortar Stores vs. Online Ssellers

Companies / Retail Sector Mar 21, 2018 - 12:41 PM GMT

By: BATR

Companies

For consumers who watched the Wal-Mart store spread throughout the countryside saw local small retailers became an endangered species. Now, some may relish the payback with the dominance of online juggernaut Amazon, who has a prime objective of closing down what remains of the brick and mortar stores. Both in the shopping center era and today with the direct delivery to your doorstep, the low cost seller proves to be the winner. What has changed is that government subsidies are fueling the carriage costs.


How Brick-and-Mortar Businesses Compete with Online Shopping raises the 64,000 question for the future of the consumer economy.

"According to Business Insider, there are 300 million users of Amazon.com and 50% of US online shoppers are on the Amazon mobile app. And recently, Wal-Mart and Google joined forces to go after Amazon with voice-activated online shopping using Google Express. Today’s busy lifestyles and the ease of online shopping continue to cause trouble for brick-and-mortar stores, with those numbers not getting back in their favor any time soon. So how can they compete?"

In order to answer that question, understanding the demographics of today's radically different generations and lifestyles is crucial. Rural vs. urban is the most stark comparison. Patronizing big box warehouse stores has been favored by suburban soccer moms for years. Their household composition utilizes a volume of items warranted by its bulk packaging. Contrast such purchases with metro singles or those living with significant others. Often these Uber riders do not even have a driver's license. Addicted to a mobile cyber app world, ordering a food drop delivery seems natural.

However, most urban societies are not high-rise penthouse dwellers. Ordering bread from a Parisian bakery online is less likely than getting a drone drop of a Subway sandwich. The point is that the size of the household unit, the availability of independent transport and the level of motivation for just in time immediate satisfaction will determine shopping patterns.

As important as the price point for purchasing any consumable product is; those who live within micro-apartment environments are very different creatures than most Americans who have always seen their home to be their castle.

Look to the City of Boston’s Housing Innovation Lab for "something it’s hoping might be part of the solution to the city’s massive housing crunch. It’s called uHu, for Urban Housing Unit, and it’s a 385-square-foot modular house that sells for $75,000 -- seven times cheaper than the average condo in Boston." Those who aim to be part of such an experiment are quite unlike those who aspire to build their homes on a 385 acre spread, away from the rat race of the urban jungle.

Folks need to learn Why Local Brick-and-Mortar Retailers Need to Rethink Everything They Know. Even Left coast merchants are apprising the dramatic consequences to their communities when buying goods through their online tech giants becomes the new normal.  

"As Americans continue to do more of their shopping online, local brick-and-mortar retailers are suffering. I can already see the impact in my neighborhood, where there are fewer businesses that sell goods, and more that sell services. The four-block commercial corridor near my home is packed with restaurants, cafes, nail salons, and businesses offering financial services. Many of these spaces used to be retail stores.

If there’s any solution to reverse the trend, crowdfunding efforts and patronage programs may be it. In my immediate vicinity, a number of bookstores are already doing this, giving away benefits such as priority seating at author events and dedicated Wi-Fi to customers who participate. Beyond ongoing patronage, there are a tremendous number of “one-time” crowdfunded cash infusions, like this campaign to raise money for Video Wave, a local video store in one of San Francisco’s wealthier neighborhoods; this one to save G&O Family Cyclery, a bike shop in Seattle; and this one for Ray’s Ragtime, a used-clothing store in Portland."

While such methods might have a small revitalization impact, Gary Shapiro argues a more sweeping alternative to Save US jobs -- level playing field between brick-and-mortar stores and online retailers.

"An often ignored loophole in existing sales tax law is giving online retailers an unfair advantage over traditional brick-and-mortar stores, forcing thousands of local stores across the U.S. to close, and tens of thousands of Americans to lose their jobs.

Congress must act to stop the bleeding, protect jobs and ensure local tax revenues are paid. This is about creating a level playing field for all businesses, whether online or traditional brick-and-mortar stores."

Mr. Shapiro advocates passage of the bipartisan Marketplace Fairness Act. However, Timothy P. Carney of the Washington Examiner points out that "Amazon joined the lobbying coalition to pass such legislation, which would force all online retailers to collect sales tax on every sale and remit it to the state of the buyer. This is a huge compliance burden for smaller retailers but no big deal for Amazon. Also smaller retailers, with no network of warehouses, are not required under current law to collect sales taxes, and Amazon didn't like that. Pass the Marketplace Fairness Act, and bam—you impose a big burden on Amazon's smaller competitors."  

As with most monopolies, purported consumer friendly legislation may sound like providing a level playing field but when you dig into the details the Amazons and Wal-Marts are operating on an Animal Farm where "All animals are equal but some animals are more equal than others."   

There is no doubt that online selling will be even more encouraged if not forced down the throats of customers. Nonetheless, the merchant economy is a vital part of any society that builds upon community aspirations and economic growth. When consumers spend most of their money at corporatist businesses, whether online, at a super mart or mall location; they are feeding the Orwellian, Napoleon boar.    

The balance between shops and clicks can best be achieved by buying products made in America and sold by your neighbor in an independently owned store whenever possible.

James Hall

Source: http://batr.org/merchantry/032118.html

Discuss or comment about this essay on the BATR Forum

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Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors

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