The shift to online is accelerating
The death spiral is underway.
Online retailers have found the formula to beat brick-and-mortar. The combination of fast and free shipping along with limitless selection has tipped the scales and there is no going back.
There are exceptions, many people still want to see and feel the things they buy. Many companies will also leverage their brands to shift online. The problem is that the costs of the transition and the new, lower-margin world will be devastating to stock prices.
It's already well underway. Here are retailers and commercial real estate companies hitting new 52-week lows just today (via @carlquintanilla).
The granddaddy of retail -- Wal-Mart -- reports tomorrow before the bell.
Many narratives pit Amazon against Wal-Mart in the battle of new versus old but Wal-Mart has essentially conceded defeat. Instead of fighting to maintain its old business model like some of the names listed above, it's embracing and investing in online.
But what will be critical to watch in its earnings report is margins. Wal-Mart is a marvel of inventory management and distribution but Amazon is just as good and doesn't care about profits. That's tough to compete with.
So Wal-Mart may survive and compete alongside Amazon in a zero-margin world but for the rest of the pack, it's only a matter of time until millions of square retail real estate is barren. We've only scratched the surface of the consequences for workers, markets and the global economy.
