Traditional retail stores may be headed the way of the newspaper: valuable to a niche, but a “difficult” investment for the majority, which will turn instead to — where else? — Amazon.
That’s according to New York University professor Scott Galloway, who founded the New York business consultancy L2. Galloway predicted that Amazon could multiply the average annual spending of Prime households from today’s $1,300 to $7,000 or more, propelling the eCommerce company to a $1 trillion market cap before either Google or Apple reach the mark.
On this week’s episode of the podcast Recode Decode, Galloway told host Kara Swisher that America has become oversaturated with stores, and all of that is about to come crumbling down around retailers ears due to stagnant middle-class wages; a cultural transition away from things and toward experiences; and the fast, easy availability of pretty much any kind of consumer good from, yep, Amazon.
It’s not that Amazon is killing retail, per se. But there’s no denying that the eCommerce giant stands ready to capture more than 90 percent of purchase transactions, from books to groceries to fashion, that consumers find tedious. Galloway predicted that companies that “deliver joy” (such as Ray Ban, Porsche, Manolo Blahnik) will weather the reckoning and the rest will slowly buckle.
The crumbling of retail will pull the rug out from under millions of cashiers as retailers look to “optimize their stores” — “which is code for ‘fire people,’” Galloway said. Three million of America’s 11 million cashiers stand to lose their jobs just from grocery store cutbacks, he said. He also predicts that 40 million shareholders in Gap and Walmart will be wishing they’d invested their money elsewhere.
“You’re effectively seeing this giant sucking sound out of the entire retail ecosystem into a small number of players,” said Galloway.