Amazon Europe Retail Losses Bigger Than Sears

A new report from Clothesource contends the 2017 losses that dumped Sears into its bankruptcy filing are about the same as Amazon's losses on European retail alone. 
   

Sears lost $981 million in 2017.  Like the $988 million loss at Amazon's European retail holding company, according to accounts filed at London's Companies House.

   

'In fact, with online sales accounting for 8.9% of US retail in 2017, the impact of Amazon, or any other online retailer, on Sears is widely over-rated,' says Mike Flanagan, CEO of Clothesource, an Oxford-based apparel industry consultancy.

   

Though the US Census Bureau shows online retail grew 15% in the first half of 2018, physical stores still accounted for three-quarters of America's retail growth.  Sales through physical stores have grown every year since the 2008 recession.

   

Sears was struggling to adapt to a changing world before e-commerce was invented, and it did no better after e-commerce came along.  But well run physical retailers are prospering.  The biggest clothing specialists on either side of the Atlantic (Inditex and TJX) get almost all their sales from physical stores - and they've upped their sales and profit forecasts.

   

Sales through physical stores have kept growing in the United Kingdom as well, Britain's Office of National Statistics reports.

   

E-commerce sells less than people think and it costs more than people expected.  Broker Credit Suisse now says that for selling clothes, 'not being online is an advantage'. 

   

'Primark makes more profit than any other UK clothes retailer - because it doesn't sell online, not despite it.  But it's brilliant at using the web for talking to its customers,' Credit Suisse adds. 'Primark's social media engagement is best in class', it says, compared to H&M, Inditex, ASOS, Zalando, and Boohoo.

TJX Cos and Ross Stores, America's most profitable clothes shops, scarcely sell anything online either.'  

   

Clothesource's new report, ' The Emperors' Clothes', shows how other myths abound.

   

Physical stores aren't disappearing in the US.  Consultancy Coresight revealed that in 2018 through October 19, 70% more stores opened than closed.  In the UK, by 2018, the country's tax collectors reported 2% more shops than in 2017 - and 8% more than in 2007.

   

In both Britain and the US, more people are working in retail today than a decade ago.

   

'So the problem's not about inevitable shifts in consumer purchasing.  The main problem lies with retailers' management.' says Flanagan.  'They've lost touch with their customers.  Clothing stores keep aiming at millennials - broke, indebted and in precarious jobs - when most clothes spending comes from the middle-aged.  They're selling fashion when their customers want stylish clothes that fit properly.'

   

Worse: 'Retail used to be synonymous with frugality.  But retailers have spent fortunes on new physical stores.  Worldwide, the ten major clothing specialists have three times more branches than in 2000'.