A Brief History of Shopping: From Sears to Amazon in four uneasy upheavals

https://www.city-journal.org/brief-history-shopping-16232.html

by acsillag • 8 years ago

50 10 8 years ago

city-journal.org

adventured3• 8 years ago

Reminds me of this slide from a Walmart presentation from last year. Leading retailers by revenue, 1970 vs 2017:

https://i.imgur.com/GK2kvh3.jpg

newnewpdro• 8 years ago

How long before Amazon and Walmart swap places?

adventured3• 8 years ago

Amazon has to roughly triple in size in retail to pass Walmart, with zero growth on Walmart's side.

In retail sales, I would guess Amazon could catch up to Walmart in 10 to 12 years if everything goes well for Amazon, assuming Walmart holds steady (which impressively they have so far). Walmart did finally grow for the first time in years in 2017, jumping from $485b in sales to $500b (they were stuck in the $482b-$485b range for three fiscal years).

Walmart has perhaps ~$450b in strictly retail sales globally. Amazon should be at something like $160b to $180b this year (in retail, including Whole Foods). Walmart's US retail sales were 270% larger than Amazon US for 2017. One of the not often discussed data points, is that Amazon's traditional online retail sales are no longer growing very quickly. That big retail growth slowdown has been hidden by the success of AWS and more recently advertising. I'd bet on their online sales growth being a slugfest going forward, with their online growth rate dropping to near single digits within a few years.

There's actually a very plausible scenario where Amazon never passes Walmart in retail. That premise is that it's between very difficult and impossible for Amazon's online sales to match what Walmart's epic physical store position makes possible in terms of retail sales volume. It's not a popular media premise though, the Amazon-crushes-all story is what sells. Perhaps Amazon will divert a lot more resources toward expanding physically going forward to counter that (at least they seem bent on that, maybe they've figured out that online retail sales will never match offline sales in the US).

Amazon so far has been mostly eating other retailers, and perhaps robbing Walmart of some growth it would otherwise have picked up. As Amazon pursues its next $100b in retail sales growth, is it possible for that to not detract from Walmart's $500b in sales? It's difficult to picture Amazon getting as big as Walmart in retail, without killing Walmart. If that does happen - they both survive intact - the rest of retail will be a complete wasteland of destruction (there's not enough growth in the US economy to accomodate two mainstream retailers the size of Walmart anytime soon, without a lot of other retail getting killed in the process).

hedvig• 8 years ago

No wonder, some of those 70s retailers' logos are barely legible.

Animats• 8 years ago

The really big operations of each generation each had a breakthrough in information processing. Sears figured out to do fulfillment from a big catalog for a large number of orders without O(N * M) operating cost. If you just have a big warehouse and people running around picking orders (like Safeway Select), the bigger the inventory, the costs climb with the product of the inventory size and number of transactions. Sears in Chicago covered several city blocks with multi-story buildings; they needed a better approach.

The breakthrough was the "schedule system". Orders came in and were recopied onto pick slips for different departments. Each order was given a temporary bin and a 45 minute pick window. Only orders for a given time window were picked in that window, and picking was by people close to that area of merchandise. Picked items were sent to the bin for that order, and at the end of each window, the bins went off to the checking and shipping station. If something was missing from the order, a second try was made in a day or two, and shipped separately. This is O(N * log(M)). Huge win.

This was all done with carbon paper, pneumatic tubes, and other advanced 19th century technology. They had the key idea - move data, not merchandise.

WalMart had a similar edge. They were one of the first retailers to bar-code everything. All the scanners were networked. HQ in Bentonville, Arkansas knew within hours what was selling and what needed to be restocked. They were able to keep unsold inventory down without being sold out. Unsold inventory is the curse of retail. Over half of apparel is eventually discounted or dumped. Sam Walton once commented that their edge wasn't size, but data.

Amazon everyone here knows about, so there's no need to explain them.

m_coder• 8 years ago

> Unsold inventory is the curse of retail.

Absolutely. I run a small retail pet-farm store location. This is such a curse, that I often wonder why it isn't talked more about among small retailers. Certainly the salespeople from the different suppliers never ever talk about about it for obvious reasons. The problems with not talking about it to me is that I may go out of business if I don't understand this principle/curse.

fatnoah• 8 years ago

IMHO, Sears is going under because it's a terrible shopping experience. I worked next door to a Sears - my office was literally 50 feet away. I'd occasionally pop in to pick something up and the checkout process never took less than 15 minutes. There was only one person handling the checkout and that person was operating at the speed of a sloths up to its neck in molasses.

It never ceases to amaze me that for all of the money brick and mortar retailers spend on marketing, etc. they cheap out on the most fundamental part of retail - taking the customers money.

A Brief History of Shopping: From Sears to Amazon in four uneasy upheavals

Related Stories