EnterpriseECommerce
Internet Is Crushing Department Stores

August 3, 2016

There is one simple truth, internet retail is booming while brick & mortar department stores are in a free fall. The chart below from Standard Chartered Research tells the story



"U.S. private consumption has shown ongoing resilience," says a note from Standard Chartered Plc via Bloomberg, "but this macro story masks sizeable divergence at the micro level, and this explains the wide interpretation of 'how's the U.S. consumer doing?' The micro story is characterized by a parabolic rise in internet sales at the expense of 'bricks and mortar' stores, particularly department stores."

The above stat isn't as bad as you think considering that every department store also has an online presence and are working hard grow that aspect of their business. But even with that department stores are struggling online. "Digital sales continued strong, still growing double digits, but it too grew less rapidly than anticipated," said Macy's Chief Financial Officer Karen Hoguet during their May earnings call (PDF).

Internet business guru and financial analyst Robert Peck sees a shift in online shopping toward specialty boutiques and well run mom & pop stores. He says that as the internet generation grew up they don't have reservations against online shopping like their parents did.

Presumably, one of the main drivers of online shoppers to Amazon was a belief that you wouldn't get ripped off or have your credit card info passed around. This fear has dissipated over time but is completely non-existent with those that grew up with the internet.
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