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It’s Not Just Retailers Who Will Be Carved Up By Amazon’s Arrival

Shares in Macy’s the big US retailer plunged last night due in part to Amazon, who are tearing bricks and mortar retailers apart in the US.

US department stores have shed more than 32,000 jobs over the past 12 months to April, according to US government estimates with retailers blaming Amazon for “tearing up their businesses”.

The bad news from Macy’s that drove their value down was that quarterly sales slid 7.5%.

Like-for-like sales fell 4.6% their share value fell 14% in afternoon trading in New York.

Adding to the considerable pain that retailers are experiencing from Amazon who grew sales in the last quarter 53%, is that countless retailers have been seeking bankruptcy protection in the last few months, shopping mall operators including the Australian owned Westfield are now feeling the effect of Amazon’s online growth.

The retailers claim that the single biggest culprits of these retailers’ pain have been the unrelenting growth of Amazon.com who will shortly roll out in Australia.

Despite valiant efforts by many top brick-and-mortar chains, notably Walmart, Best Buy and Lowes, Amazon along generate 53% of e-commerce growth during the last quarter and over the peak holiday period, according to Slice Intelligence, padding its lead over the rest of retail.

While retailers were laying off staff, Amazon was announcing 30,000 new part time jobs.

In Australia shopping centre owners are starting to get worried.

GPT Group chairman Rob Ferguson told shareholders at the annual general meeting in Sydney on Thursday that Amazon would have an influence on the retail and industrial property sectors, his Company is one of the biggest owners of shopping centres in Australia.

In Australia property developers are trying to position themselves to profit from the arrival of the internet “disrupter” into the Australian market.

“Amazon is moving to Australia and will have an impact on retailers, but we would love to build a warehouse for them,” Mr Ferguson said in response to a shareholder’s question.

GPT’s desire adds to that of property peer Dexus Property, which said at a recent Macquarie Australia Conference that it too welcomed the arrival of Amazon.

Fairfax Media reported that Dexus chief finance officer Alison Harrop said the group believed Amazon would be looking for assets with proximity to infrastructure, such as ports, rail and road.

Ms Harrop said Dexus “believes Amazon will aid the industrial sector, by supporting both demand and rents”.

Amazon who are currently in discussions Goodman Group who they work with in the USA, to secure a fulfilment centre space at the group’s Oakdale industrial estate at Eastern Creek, Sydney.

Goodman is Amazon’s largest, global landlord and has the space available at the industrial estate.

According to Citi analysts, Craig Woolford, “a 2018 launch is the most likely outcome”.

ChannelNews agrees with this assessment.

Macy’s who are now having to rethink their future, also expects sales to fall an additional 4% this year.

Fears about the health of the US retail sector spread to rival department store chains, with shares in Kohl’s falling more than 5% and JC Penney slipping more than 8%.

Mr Gennette said: “These are unusual and challenging times for retail, especially for mall-based stores. We certainly know these changes that we’re seeing are … not cyclical.”

Macy’s who has more than 700 stores have strived to see off the rise of online retailing by adding discount areas to its stores, striking deals to stock exclusive fashion lines, and making it easier to try on shoes.

Mr Gennette said Macy’s hoped to introduce a new store format next year.

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