OP-ED: AMAZON IS NOT THE ENEMY OF RETAIL

Our Secretary of the Treasury, Steven Mnuchin very recently stated that Amazon was “destroying the retail industry and really hurting small business.” He pledged that the administration would look into Amazon. I first thought this was just political conversation and probably President Trump’s attempt to get back at Jeff Bezos and The Washington Post.  However, the more I thought about this the more disturbed I have become. Mnuchin’s comments are so wrong and so dangerous on so many levels. The Secretary of the Treasury of the United States of America has come out against innovation, progress, and change.

Amazon has certainly become a huge and dominant factor in our industry, but this is the very definition of progress and innovation. Amazon, while enormous, represents less than 4 percent of U.S. retail sales and less than 1 percent of international retail. But does the shift lie in Amazon or is Amazon the pseudonym for internet retailing?

Forty years ago, these same claims were aimed at Walmart. People shouted that Walmart would certainly kill the local stores and was unfair competition. Sixty years ago, the same claims were aimed at suburban shopping centers that these new retail formats would destroy downtown merchants. I am sure that at some point people said that automobiles would kill the buggy whip business. The common denominator: fear of change.

But this is really all about the consumer. Suburban shopping centers worked because they placed stores where the consumer now lived. Walmart worked because they offered the consumer prices which were less than the small local retailers. Who was being unfair when they charged the same consumer more money than offered by Walmart?

Amazon offers the convenience that today’s consumer’s want. Consumers can now buy products at great prices from their mobile phone and get it delivered to their home in two days or less. What’s more, Amazon has grown its third-party offerings 25 percent just this year. Plain and simple, the company is just highlighting those more “traditional” merchants who are doing a bad job. When a merchant can’t compete against Amazon because their offering is old, unimaginative with little appeal to the consumer, who is destroying retail?

Arguably the most successful retailer in the country is TJX, and, interestingly, less than 1 percent of its sales are done online. Amazon has grown because they have offered the consumer exactly what the consumer wants. Is this not the very definition of innovation and the moniker of a real merchant?

Interesting that Steven Mnuchin was a past board member of Sears.  Enough said…

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Fred Rosenfeld is an industry consultant. He can be reached at frosenfeld@comcast.net.