Despite positive macroeconomic conditions (consumer confidence is at its highest since 2004, while household debt obligations are near their lowest since 1980, c.2.5% wage growth), the traditional US retailers are in turmoil. Footfall in shopping malls is declining and department store closures are accelerating.
A structural shift to shopping online is a key driver behind this and Amazon, for example, is clearly disrupting the market. Amazon, in a nutshell, looks to provide customers with a high level of convenience, is price aggressive and provides a wide spectrum of products and services. As a result, US department stores' clothing sales have declined by $5.7bn since 2011, while Amazon's has increased by $15.4bn. With e-commerce representing only 8% of total US retail sales (in the UK, this is 16%), we expect this trend to accelerate to more than 40% in the long term. Investment in ...
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