The retail industry isn’t doing so hot these days. Give the hundreds of store closures and thousands of layoffs, one could say it’s in the toilet. As fewer people shop at physical stores and malls, mall-centric businesses and big-box stores are pondering their existence and closing up shop.
Where do shoppers go to buy their wares if they stopped showing up at stores? Nowhere, actually. Instead of trekking to their local shopping mall or retail block, shoppers are staying home and buying stuff online by the billions. Though every sane business has an online storefront, many American shoppers do all of their buying on Amazon.com ($AMZN). This push towards online buying is what caused the Washington company’s stock to explode in value in their two decades as a publicly traded company.
Just how much did Amazon grow in the last decade-plus? Better yet, how far did major American retailers fall in the same time period?
Major American retailers are now worth a fraction of their value in 2006.
It’s almost hard to believe that major American retailers like Macy’s ($M) and Sears ($SHLD) are worth tens of billions less now than they were a little over a decade ago. It’s also hard to believe that Walmart ($WAL), a company once thought to be unstoppable, grew by only 2% between 2006 and 2017. The truth is that these companies and other, smaller retailers all have Amazon to thank for their decline.
Should you invest in retail stores anyway?
If you’re investing in retail stores right now, you’re likely doing so with the hopes that your retail stock of choice will be acquired for more than it’s currently worth. These stores and others are currently trying to figure out how to lose less money and stay alive in a poor retail market. Meanwhile, Amazon investors are seeing their stock hit record highs and make sweet gains.
If you really want to invest in longstanding American retailers, do your research and know what you’re getting into. They could see a nice turnaround and actually make money in the future, but doing so would require nothing short of a miracle. If you have high hopes for these brands, you might be in for a rude awakening in the future.