I understand and believe that tax policy cannot be putative or directed against one entity, but something needs to be done before the US retailing industry is decimated.
I understand that many of the record number of retail bankruptcies and store closings in the first quarter of this year, can be laid at the feet of private equity firms, which piled up unsustainable debt levels on these troubled companies when they took them over in the last five years.
However, when you have Sears, Macy’s, JCPenney all closing stores, with Sears/Kmart teetering on the brink of bankruptcy, you have to look at the uneven playing field Amazon enjoys visa vis brick and mortar competitors.
From a tax policy perspective yesterday’s mall anchor stores cannot compete with Amazon on pricing, but in the past have made it profitable on volume. Well the volume has fallen off and the depressed revenues no long can support the debt load sitting on the balance sheet.
Amazon CEO Jeff Bezos, who survived the dot-com implosion and 15 years of losses, built a giant e-commerce operation that is the envy of the industry. He built the operation with the basic premise that he could sell to anyone with the minimum amount of human intervention.
While Amazon has stated recently it will hire more people as the numbers of retail employees who have lost their jobs move into millions this year. I equate this hiring as insignificant in both salary and quality.
Amazon does not provide a retail career, they offer seasonal or part-time positions in warehouses. Bezos has also pushed the company into becoming a shipping company — both maritime and trucking — both of which will probably be autonomously driven.
This will send millions of truckers and UPS, FedEx and USPS employees looking for part-time jobs in some warehouse for Amazon.
Now Bezos and Amazon are not the sole “Dr. Evil” for the decimation of US retailers. In Manhattan the exclusive shopping area of 5th Avenue between 49th Street and 59th Street — where Trump Tower sits — has more darkened storefronts than most can ever remember.
No the US consumer — both high-end and lower end — has little appetite or resources to be aspirational. That’s something I will write about in the coming days.