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Brick-and-Mortar Slammed Again as E-commerce Rises

The Commerce Department recently released second-quarter e-commerce data, and despite the belief that e-commerce is "over-hyped" because it makes up less than 10% of total retail sales, the statistics for brick-and-mortar retail still remains grim. Over the past five years, e-commerce has nearly doubled and shows no signs of abating.

In Q2 total retail sales, excluding restaurants and bars, increased 5.7% to a seasonally adjusted $1.33 trillion. What is interesting to note, however, is that online-resistant retailers, including the gas stations, car dealerships, grocery and beverage stores that make up 52% of brick-and-mortar retail sales, rose 6.2% to $621.5 billion. The remaining 48% of retail sales that include department stores, book stores, electronic stores, toy stores and other stores susceptible to e-commerce attack rose only 3.3%, less than the combined inflation and population growth of 3.7%.

Consider this: Toys "R" Us is gone, Borders is history, Barnes and Noble struggles and music and video stores are a distant memory. Department stores sales have dropped 36% since their 2001 peak, and iconic names such as Sears, JC Penny, Gump's and Bon-Ton are shuttering stores or on the chopping block.

It may take years, but a structural change in retail is occurring, and it is prudent to recognize and prepare for entire segments of the retail sector to disappear.

And in case one is wondering what is now on Amazon's radar: to increase its media offerings through a brick-and-mortar presence, it was recently announced that Amazon is looking to acquire Landmark Theaters

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