With Amazon Books slated to open a bricks-and-mortar store on Fourth Street soon, this seems to be a good time to let merchants on that shopping thoroughfare better understand what kind of a neighbor they will be getting. While independent bookstores were the first to bear the brunt of Amazon’s march to online selling dominance, the online behemoth now competes fiercely with virtually every retailer in the country, from Walmart to Mary’s flower shop. And they’re really good at it. In 2016, Amazon.com was responsible for the closing of 6,000 stores and the loss of more than 87,000 retail jobs in California alone. That’s according to an economic study produced by Civic Economics. The national stats are equally staggering.
Here’s some some local context for those numbers. Let’s say Jane Doe buys a book, purchases a Kindle, or signs up for Amazon Prime at the new Amazon Books on Fourth Street. In the process, Jane’s email address is collected or her existing account is triggered. Amazon now knows where that purchase was made and is ready to market directly to unsuspecting Jane.
That marketing will not focus primarily on books, although the decades-old community resource that is Builders Booksource will of course be impacted. But Amazon will look at what else is on the block and where opportunity awaits. Sur La Table sells a lovely high-end kitchen cart that Amazon offers for significantly less, and before you can say salad spinner, Jane will receive emails reminding her of all the kitchenware she can purchase more cheaply. The Gardener sells a number of garden tools that Amazon features for somewhat less. So Jane’s email goes on the home/garden mailing list as well, which is handy because that also covers all the home goods Amazon discounts to compete with Anthropologie.
Business studies have consistently shown that when a chain store opens, smaller neighborhood retailers in the area see a 15% loss in customers and revenue for about a year. Given that, let’s assume that the ultimate chain store, Amazon.com (through its new Berkeley information gathering receptacle), will have a similar effect. That means more Fourth Street patrons buying online through Amazon, thereby taking fewer shopping trips to Fourth Street. For the purposes of easy math, let’s further assume that a retailer in that neighborhood averages 100 shoppers a day, spending an average of $30 each (those numbers are low). Being conservative, let’s say that a store only loses 10% of its daily trade because of Amazon’s impact – 90 transactions instead of 100 and $300 less revenue. Again, for easy math, we’ll assume the store closes on every holiday imaginable and is open 350 days a year. $300 x 350 days equals $105,000. That’s a lot of lost revenue to make up, and raising prices will only make Amazon look even better. One logical but undesirable solution – lay off two or three employees. And that’s just the first year. Uh oh.
And consider this — ten fewer customers a day x 350 days means foot traffic is down by 3,500 people a year, and that’s just from one store. How many of them might have also been hungry that day? I guarantee you that, even if this scenario only impacts a handful of stores, you won’t have to wait as long (if at all) for a seat at Bette’s Oceanview Diner. Fewer customers at one store starts dominoes falling all down the street.
The good news is that you, the consumer, have all the power here. You make buying decisions based on financial considerations, convenience, personal taste and myriad other reasons. Many of you choose to live in neighborhoods with vibrant shopping corridors because you value the sense of community that creates. The choice is yours. Of course the desire, or more often the need, to save a few dollars is understandable. But purchasing decisions driven by price alone do produce consequences — just take a walk in the Elmwood or Rockridge neighborhoods (to name two) and count the empty storefronts. Also, it’s worth remembering that for every $100 dollars spent at locally owned businesses, $62 is reinvested the local economy; the same $100 spent at bricks-and-mortar chains only returns $38 locally. Shop online with Amazon and the return is less than $20. Food for thought, I hope.
