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Global Outlook

Retail Analyst Says Recession Is Driving Consumers Online; Predicts "Terrible” Christmas Shopping Season

October 17, 2013, Thursday, 22:16 GMT | 17:16 EST | 01:46 IST | 04:16 SGT
Contributed by eResearch


Howard Davidowitz, retail analyst and Chairman of Davidowitz & Associates, explains how the new economic environment of razor thin margins, high commercial property rates, along with a massive and growing number of consumers desperate to save money is radically shaping the retail space and accelerating the shift to online shopping:

“80% of Americans are working less hours, getting less pay...so that Americans are having to watch every last penny...that is one of the biggest reasons why Amazon will be the new Walmart; and they’re quickly becoming the new Walmart. They’re becoming that because they can sell it for less.they don’t have to pay all that rent, they don’t have to have all these stores, they don’t have to have all these employees. You know, it’s a lot cheaper to have fulfillment centers; and you can have robots running around [instead].”

“If you look at retail stores in America, they’re getting smaller. Part of that is the impact of online. You look at Walmart.their growth is in smaller stores—neighborhood markets. They’re not building as many supercenters. Look at Target—they’re building smaller stores. Look at Kohl’s— they’re building smaller stores. Staples. Everybody is building smaller stores. And they’re building smaller stores because more business is being done online.”

“If you call any retail chain and said, ‘What’s your fastest growing business?’ they’ll tell you, ‘Online.’ Walmart is adding thousands of people in Silicon Valley.they’re acquiring companies to enhance their online efforts. All of them are pouring a fortune into their online business...it’s the fastest growing area for everybody.retail is going to hire more people in their online divisions than they are going to hire in their stores. That’s where the growth is; that’s where the hiring is going to come from; that’s where the investment is going.”

“You’ve got to keep in mind, 80% of this country is in a recession. Soon, one-third of America will be in poverty.the result of that is that people are looking for cheap, cheap, cheap.”

When asked in the near-term what this means for the upcoming Christmas shopping season, Howard cites recent sales for Walmart, Target, and other major retailers and says, “Christmas is going to be terrible.”