retail news in context, analysis with attitude

Yesterday we took note of a Washington Post report that Treasury Secretary Steven Mnuchin, in the wake of an announcement that the US Department of Justice will conduct an antitrust probe in tech giants, said that it is a good idea because one of those companies, Amazon, has “destroyed the retail industry.”

Mnuchin said, “I think if you look at Amazon, although there are certain benefits to it, they’ve destroyed the retail industry across the United States, so there’s no question they’ve limited competition. There’s areas where they’ve really hurt small businesses.”

Asked if Amazon’s dominance is any different from Walmart’s, Mnuchin said, “In a way it’s the same, and in a way it’s different. People had those concerns about Walmart. As you see, Walmart developed a business where small businesses could continue to compete with them. And, look, Walmart ceded a lot of the retail business to Amazon.”

My comment, in part:

What a load of crap … I’m in favor of healthy and nuanced oversight. But Mnuchin’s rationale about how Walmart was less impactful on competitive retailers than Amazon, and how Amazon has “destroyed” retail, strikes me as utter nonsense.

Many retailers suffering because of Amazon - and Walmart - have committed suicide. It isn’t homicide. Not by a long shot.

Does Amazon have an unfair advantage over many retailers? Sure it does - because it has been more innovative, disruptive, insightful and in touch with what consumers needed and wanted even before those shoppers knew what they needed and wanted. Walmart had similar advantages just a few years ago, because it was able to identify weaknesses in traditional retail and then exploited them.

That’s what insurgent retailers do. But what Mnuchin doesn’t understand is that this still leaves room for competitive retailers to find ways to come at the market with their own unique expertise and offerings. But they have to do it. They have to compete. They don’t get to just complain about how unfair the world is and how the government ought to regulate their competition out of their earned advantages.


The Post also pointed out that Mnuchin has some experience with retail: He “is one of several former board members being sued by Sears Holding Corp. for allegedly stripping the retailer of billions of dollars as it spiraled into bankruptcy. Sears, the more-than-a-century-old American icon, filed for bankruptcy last year after years of mounting losses during private equity ownership.”

I said:

Oh yeah. This is the guy we want protecting the interests of “small businesses” - someone who was in cahoots with Eddie Lampert, who has done almost nothing to create value at Sears during his ownership and management of the company.

Give me a break.


One MNB reader responded:

I completely agree with your view…at the end of the day, most retail operations are just conduits for manufacturers and producers to bring their goods to market trying to remember how to be different that the competition. But Amazon….Amazon is the slickest portal available for consumers today to purchase pretty much any every day or arcane product they may need. Products that are the same, no matter where they’re purchased. I mean, a box of Kleenex is a box of Kleenex no matter where it’s purchased, and no bricks and mortar retail operation can come remotely close to the variety of items found with just a couple of clicks on Amazon’s site. Bricks and mortar, or online, it’s all about the experience delivered…right?

You hit on it in your response, the retail boogieman is not Amazon, it’s the decades old bricks and mortar fascination with LBO’s, and the resulting laser beam focus on consolidation, centralization, the search for elusive efficiencies, and achieving the appropriate ROI of the investor group at the expense of their customers’ needs that created the vacuum that Amazon so nicely filled. For many retailers today, the reflection in the mirror is the boogieman.


From another reader:

I agree with your point.

Walmart mowed down its competitors at least Amazon lets its competitors sell on its site. Then, retailers cannot continue to just offer “less” of the same, with “less” customer service and no innovation.

There are still retailers that get it.  I point to Trader Joes, Costco that still provide great customer interaction and good experiences.

The other big guys…. Not so much.
 
Oh don’t get me started on Sears… I’d love to sell that textbook on what not to do. Maybe a working title could be, “Customer?  Who needs them.”


Let’s see if down the road we find out that Mnuchin has a financial connection to Walmart.

From MNB reader Paul Durrenberger:

Gee, do you think maybe this all came up because Mnuchin is a Trump Administration lackey?

I know this Amazon rant is a new “Trump” thing, probably because he’s jealous of Bezos, but for years many people, myself included, have thought it’s been WalMart that destroyed small business in America.

All you have to do is look at their locations, out along the expressways, away from little downtowns where small businesses just couldn’t compete with their prices because of Walmart’s size advantage. I really don’t think it was much else. It sure wasn’t quality, and it sure wasn’t the shopping experience. So people went because it was cheap crap all in one place!


And from another:

He’s shooting at the wrong target.  It’s the poor, dumb American consumer who’s “destroyed the retail industry.”  Nobody forced them to buy from Amazon.

Not everyone agreed with me, however:

I agree with you about the Sears thing, but disagree regarding Amazon. I don’t know what the numbers are, but brick and mortar stores are being affected. It would be great if you could come up with some numbers. Another thing: what are Amazon employees paid vs retail employees?

Also, all the cardboard boxes used by Amazon, are wasteful. Not good for forests etc etc.  All this said, I have in fact, bought one or two things via Amazon. Only because my local store did not have what I needed.


Never said Amazon is a perfect company, and I certainly wouldn’t argue that Amazon hasn’t had an impact on many retailers. I would agree with what MNB reader Stewart Sundholm wrote:

To borrow a phrase (I am reading “The Everything Store”):

“Amazon didn’t happen to retail, the future happened to retail.”
KC's View: