In the same week Amazon (NASDAQ: AMZN) enjoyed their highest ever share price, traditional retail stocks across America plunged.
Weak first quarter reports across all traditional retailers sent stocks into a tailspin. Macy’s (NYSE: M) saw a 50% drop in stocks over the year as well as their worst sales since the recession. Luxury retailer Nordstrom (NYSE: JWN) was forced to eliminate 7% of its corporate employees. Not even discount retailers like Wal-Mart (NYSE: WMT) were spared, down 15% over the last year.
Only one major retailer has remained immune to the trend by offering cheaper, innovative, and more convenient options. Amazon’s model has created chaos in retail leaving its competitors desperate to modernize. Internet retail has enjoyed a 143.1% earnings growth in the last year while all retail sub-industries saw a decline of -47.8% for the same period.
Amazon CEO Jeff Bezos recognizes the lasting effect of his model on the industry stating, “the nature of capitalism is somebody’s always, if you’ve got a good business, trying to figure out how to take it away from you and improve on it.”
Warren Buffet, chairman and CEO of Berskshire Hathway, is taking notice of Amazon. On April 30th the firm hosted their first ever live-streamed shareholder meeting. Buffett and vice chairman Charlie Munger dedicated a considerable amount of time during the meeting to Amazon. The two agree that traditional retail needs to evolve to keep up with Amazon.
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