
Old-fashioned malls are beating Amazon in small-town America - frgtpsswrdlame
https://www.washingtonpost.com/business/economy/the-only-mall-for-miles/2017/05/19/0571e478-39aa-11e7-9e48-c4f199710b69_story.html?utm_term=.d054face50e1
======
dkrich
To me it seems that malls aren't dying, there's just been a major shift in who
shops at them. Malls that are in prime real estate that cater to wealthy
shoppers are doing quite well. Just go to Tyson's Corner in Virginia, or
Somerset Mall outside Detroit on any Saturday and you will see that the
reports of brick-and-mortar's death are greatly exaggerated.

But with regard to stores like Sears, JCPenney, and Macy's, the problem is
that whereas in the 1980's, just about everyone shopped at them for everything
but groceries and would travel from long distances to do so, nowadays it's
just people who live nearby and just a subset of them.

I think this notion that it's Amazon that's killing traditional retail has
some truth but it's very much oversimplified. While Amazon is no doubt eating
into the sales of stores in every industry, I don't think Amazon is killing
JCPenney, for example. After all, how many people do you know who buy their
jeans on Amazon?

I think what's killing clothing retailers is the prevalence of a large number
of smaller, niche manufacturers. People no longer want to buy drab clothing
off a rack, they want to buy from a particular brand. People either are price-
sensitive shoppers who will go buy off the rack from TJ Maxx or Ross, or are
at the other extreme and want expensive name brands and will buy direct from
the source or a select set of online retailers that sell them. That leaves
retailers like JCPenney and Macy's in kind of a no-man's land.

~~~
j-c-hewitt
I have worked on a lot of Amazon accounts and I even do a fair amount of
retail arbitrage from TJ Maxx / JC Penney -> Amazon both online and in-store.
Given that the bulk of my income either comes directly from Amazon sales or
indirectly through consulting for Amazon sellers you would think that I would
be in the ra-ra-ra-Amazon-will-annihilate-traditional-retail camp.

The big advantage that discount retailers like those have for shoppers over
Amazon is price and being able to physically inspect merchandise before you
buy it. The selection of certain brands is also often better at the physical
retail stores.

The fact that you can make > 75% profit margins per unit in some categories
flipping from discount retail to Amazon FBA demonstrates the advantage that
these retailers have over Amazon. Amazon's fee structure also makes it so that
certain price points are just about never going to be profitable for Amazon
unless fees go down -- and fees have been going up quite substantially.

If you want good prices, you should not shop at Amazon - you should shop at a
physical retailer.

So, Amazon has some issues with its model especially in categories like
apparel that make it a pain to earn continual profits from. I prefer to sell
men's to women's apparel for example because women return products for fit
reasons at much higher rates as compared to men. Fitting measurements for
women are also much less standardized because there's a lot of variance in
female body shape. A return on Amazon is more costly to a seller than it is to
a physical retailer.

Also, JC Penney generally has a minimum quality standard and often really
impressive prices per unit that Amazon's fee structure makes it impossible to
beat. You are not going to profit from selling a $7 polo shirt on Amazon
unless the quality is awful and maybe if Amazon is buying it from you as a
vendor. If you buy a $7 polo from JC Penney the quality might actually be
great and JCP will earn a profit.

I have different opinions about Macy's because they generally do not have a
price advantage. There is really no benefit to buying stuff at Macy's unless
you really want the name brands and you don't mind paying a higher price. For
a certain kind of shopper, that's what they want and that's what they'll get
from Macy's.

This article is just as cherry picked as some of the 'death-of-the-mall'
stories are. I could do a similar cherry picking locally by comparing one
successful shopping complex about 30 miles distant from another one that is
failing. Depending on which direction I drove I could tell a different
speculative story about the future of the mall in small town America.

A lot of what is missed in the retail discussion is that while online retail
is where a lot of the growth is, physical retail is where the bulk of the
transactions still happen in the US. There is a limit to how much of that
Amazon can 'eat.' Some if it is regulatory: in the latest issue of Total
Retail, two of the biggest online sellers in 2016 were Walgreens and CVS.
That's 'cause of online prescription pickup. If Amazon did go into that
business -- as it might -- then the picture might start to look significantly
different.

~~~
Fjolsvith
Here in rural northwest Kansas the nearest Walmart is an hour away. All the
local retailers cost more than Amazon. And whereas I have fiber optic
broadband, I'd rather shop on Amazon. I can, after all, return an item to them
for free if it doesn't fit.

~~~
j-c-hewitt
Absolutely, there are exceptions. I used to live in northeastern non-rural
Kansas and local stores were generally cheaper. In high cost of living areas
also prices may be cheaper on Amazon.

------
jhbadger
The problem at least for me, is that malls these days don't seem to have any
of the types of stores I like to shop at. They don't have bookstores anymore.
They don't have music stores anymore. They don't have computer software stores
anymore. It's just one clothing store after another.

~~~
problems
So maybe that's true of books, music and computer software - but those things
are often best experienced digitally anyways, many people consume them solely
as digital goods.

But when I need clothes, car parts, electronic components, computer parts, any
physical product with a non-zero chance of failure or an immediate desire
really - knowing I can try something on or walk in 10 minutes later and return
something and get it replaced on the spot is a killer feature - one that
online shopping cannot replace.

I'd go so far as to argue that real stores are always better than online
stores - online stores can only win on price and selection. For every other
metric around, delivery time, replacement effort, ability to compare and to
try, there's just no replacement.

~~~
xyzzyz
_For every other metric around, delivery time, replacement effort, ability to
compare and to try, there 's just no replacement._

For me, very often the delivery time is less important than time spent
shopping. If you want/need something, but not immediately, it is much less
effort to click "Buy" on Amazon, and get the item in 2 days, than to spend an
hour on driving to the store, walking around to find whatever item you want,
waiting in line to make a purchase, and then driving back.

~~~
Unkechaug
Agreed! There are very few things I need immediately, and to be honest by the
time I have enough time to make a trip over to a mall I could have ordered and
it would have been delivered already.

------
acchow
I've noticed a prevalence of malls in some places which has not slowed down
even in this supposed "death of the mall" internet future. Namely Canada (very
cold winters - gotta stay indoors?) and throughout major cities in Asia (hot
and humid summers - gotta stay in air conditioned indoors?). Malls in Asia are
like small cities.

~~~
kalleboo
Yeah I live in a regional capitol in Japan (pop around 300-400,000 or so?) in
a "dying" prefecture (population is going down), and in the past few years,
one mall has expanded, another large one has gone up, and there's another new
one planned. On weekends they're packed, and it can be impossible to find
parking.

------
killjoywashere
My family is in small towns: David City, Nebraska. Columbus, Nebraska. Lamar,
Colorado. Seguin, Texas. Until I read this headline, I had no idea that anyone
could define a small town as a town large enough to have a mall. The hospital
I work in employs more than twice as many people as live in David City.

------
SN76477
I think the mall has a bad reputation TBH. My friends will not dare go, but I
love it. I get Starbucks, a decent lunch, some basic shopping done and it has
a kids play area.

I think we should turn them into a sort of social hub more than a shopping
hub.

~~~
rocky1138
I'd love that if they were open later. 2am would work great. It makes a great
place to study and work. If you've never been to the 24 hour bookstore in
Taipei, someday you've gotta check it out.

------
dbg31415
I have a real issue with UPS / Amazon... ordered things like air filters, or a
closet mounting rail, or just other random odds and ends I normally get an
Home Depot or Costco... and they get all mashed up during shipping. Waste of
time / energy to get them from Amazon if I can't be assured what I order won't
be destroyed in transit. Anything that's not wrapped in another box is pretty
much guaranteed to be jacked up when it gets to me in Austin.

But when you're out in the boonies, and the UPS drivers have to go a long way
to get something to you... everything ends up busted / scuffed up in transit.
It just sucks. Whenever I order anything for my Dad from Amazon (he lives in a
very remote part of the US), what gets to him is never idea. I ordered a
cowboy hat... and somehow it was squished flat. He tried to fix it, but by the
time he told me it was destroyed in shipping it was a huge pain to return (he
didn't know about returns). I ordered a bunch of jam... and they left it
outside in sub-zero temperatures and all the jars broke because the jam
expanded when it froze. I ordered a Jew's Harp and Harmonica set for him...
and somehow the box got opened and only one of the instruments made it to him.
Amazon hasn't always been great about returns / refunds in these situations.
They are getting a little better, but it's just a shipping issue.

Shipping sucks to remote areas, and as long as shipping sucks, the Amazon
experience will suck.

------
grillvogel
even in the seattle metro, home of amazon, the malls are very popular. its an
ordeal finding a parking spot at any of the surrounding malls on a given day.
humans have always liked going to the bazaar/market/whatever and malls are the
modern version of that. online shopping doesnt provide the same satisfaction
that you get from physically going out and interacting with people and things.
probably why people do more binge shopping online to get the same "high".
physical shopping for digital goods will probably die out, but shopping in
person for clothes, cosmetics or fragrances, etc cant really be replicated
online. also with amazon you never know for sure if you're buying the
legitimate product or a cheap knockoff. I generally trust places like
nordstrom or macys more than amazon when it comes to high end products like
that.

~~~
clubm8
There's usually parking by Sears :)

~~~
remir
Funny thing is; that's true! I always park my car there because it's empty and
I don't mind walking.

------
jhoechtl
What the hell is that:

> The rise of online shopping has summoned a death knell for some of the old
> standard-bearers of retail. (Jeffrey P. Bezos, the chief executive of
> Amazon, owns The Washington Post.)

That in parentheses. Is this is a snarky comment from the editor or somehow
required to add this information? (It's good to know btw!)

~~~
icelancer
Just disclosure of potential conflict of interest.

~~~
jhoechtl
Sounds like a reasonable policy at the Washington post others should take as
an example.

~~~
zzalpha
Disclosing potential conflicts of interest is standard journalistic practice
for any respectable news organization. This isn't something the Post just
invented.

------
fataliss
Going to the mall is still a social thing. Maybe in the future with VR and
such we will reach a point were the Amazon experience is able to entertain you
and your buddies for an afternoon.... but for now, malls win at that. Amazon
destroys a mall any day when it comes to convenience, efficiency etc. but they
are a lonely solo shopping experience. Remember that in many towns between the
coasts, the mall is about the only "free" activity you can do on a Saturday
afternoon.

------
CodeCube
didn't read the article due to paywall ... but given that I pretty much grew
up in a mall (90's), I really miss them ... well, maybe just the arcades that
were in them :P

Malls in their current form (or at least, the form they were in in the 00's)
_do_ need to die. In recent times, I've seen a few bright spots of innovation.
Malls that have transformed their spaces to promote the social aspect ... just
comfortable spaces where you can hang out. Also they've been innovating with
adding bowling alleys, Arcades (albeit, the kitschy dave 'n busters type of
arcades ... better than nothing I guess), and other experience-based
attractions (rentals of little animal-shaped scooters, etc).

I hope that we can figure out something cool to do with all this real-estate
that in many cases, just sits idle

~~~
Arizhel
The idea of a mall as a social space is great; after all, lots of us spent a
good portion of our teenage years hanging out at malls for a good reason,
before they started kicking out the teens.

The problem with this is that it's expensive real estate, and people just
hanging out and maybe occasionally playing some game isn't going to generate
enough profit for the place to stay open.

~~~
leggomylibro
That's only true as long as it is expensive real estate, though.

If half the storefronts are empty and shuttered, the causeways devoid of
shoppers, the parking lots eerily silent, then how long is it going to remain
expensive?

~~~
Arizhel
Yes, but for now, at least in the more desirable locations, they seem to be
doing just fine selling lots of expensive women's clothes, shoes, and luxury
goods.

In the crappy locations, if the rent goes really low, then it's more likely to
attract a lot of gang activity and have a lot of crime.

------
reviewmon
Amazon is benefiting from decentralized local retail stores. 90% of goods a
person needs can be located within 15 mile radius. Instacart or Uber needs to
setup a central inventory system that locals can shop and get their products
within 1 hour instead of 2 days.

------
hgdsraj
Surprised to see no comments about the fact Bezos owns the post and they
randomly include the fact about halfway through the article. "(Jeffrey P.
Bezos, the chief executive of Amazon, owns The Washington Post.)"

~~~
caf
They include the fact in the first paragraph that mentions Amazon. Almost
certainly this is a house rule that all the editors at the Washington Post are
familiar with.

------
dzink
Barnes and Noble was a great place to socialize as well, but enjoying tables
and food with friends is not the same as buying retail.

------
mcphage
I'm sure some will survive, but how many? Far fewer than currently exist—which
is already far fewer than have been built.

~~~
Neliquat
Could you not say that about any business?

~~~
mcphage
Eventually, probably. But for a while, the numbers go up.

------
backtoyoujim
small town people have to deal with small town postal workers whom have an
incredible amount of leverage over the residents if they rely on amazon.

