The Future of Retail

In an age where Amazon rules supreme, it is difficult to imagine anything that could possibly disrupt their momentum. As with any large organization, allegations of abusive behavior are not uncommon but the political will to stop the abuse is often stifled by politicians that use the service themselves and prefer the status quo. The convenience of being able to purchase virtually anything online and know you have a third party that has your back makes it extremely difficult for independent retailers to compete against them effectively. Despite this, there are troubling signs on the horizon that even the biggest online presence cannot ignore.

Up until recently, Amazon has been able to avoid unionization. Although they continue to try to stop this from spreading within their organization, inevitably they will fall prey as many once dominant services have in the past. Will consumers continue to use them as much if the price of labor forces the company to increase advertised products and fees it charges? In the short term, Amazon could probably withstand this but ultimately, it would not be the first company to fall victim to the union threat.

Independent retailers have their own problems and also have to deal with higher shipping costs using delivery services. Amazon has always had the edge being able to control its delivery costs better. That edge may start to erode as labor costs drive up prices exponentially.

Brick and mortar retailers are of course feeling the squeeze too with increased building maintenance, rental costs, larger staffs, energy costs and other operating expenses. They have some advantages in that people are more likely to buy what is on display and return rates tend to be less overall than online sales but Walmart and other megastores are also putting them out of business.

Economists have long predicted online retailers would drive out most brick and mortar establishments. With shipping costs ever increasing and the threat of unionization looming over the larger online stores, even this assumption can be challenged. Ultimately, it may require a hybrid approach where more and more businesses operate out of their homes to reduce costs but utilize both online sales and home storefronts where permissible to maintain an edge. Couple this with possibly coalitions of small independent delivery services that offer cheaper rates regionally and collectively throughout the country and perhaps the future of retail may not be so bleak after all.