/ Shiftonomics by Branch

Amazon Backs Out Of New York City

We've spent what feels like many months covering the Amazon HQ2 sweepstakes, only to be surprised by the announcement late last week of Amazon pulling out of New York City.

What's followed has been a torrent of articles examining nearly every side of this debate ranging from tax credits and corporate welfare to wage disparity and the changing economic climate of places like Long Island and Queens. This week, we've featured a variety of stories that examine the Amazon story.

From retail to technology, here's the top stories we're reading this week:

🗽 What Amazon Got Wrong About NYC
🚚 The Real Problem With Amazon + NYC Deal
💡 Looking At Amazon Decision In Different Light
🚕 After Amazon, Could Uber Be Next?
🛒 Google Spends $13 Billion In U.S. Real Estate
📉 Retail Sales Biggest Drop Since 2009
🌍 NRF Reflects On Impact of Digitization
👟 Ebay Reminds Us Of Their Sneakerhead Roots
🤔 Retail Sales Drop Leaves Street Economists Skeptical
📲 Kroger Building Amazon-Style Flywheel
🛒 Most Traditional U.S. Retailers Are 'Just Surviving'

Top Stories From This Week

What Amazon got wrong about New York City | Via: theverge.com

  • In a move that had been foreshadowed by an earlier report in the Jeff Bezos-Owned Washington Post, Amazon said today that it would abandon its plans for a New York regional office.

  • After much thought and deliberation, we’ve decided not to move forward with our plans to build a headquarters for Amazon in Long Island City, Queens,” Amazon wrote in a statement this morning.

  • One big reason is that the economy is fracturing into two: with a small group of well educated professionals, who enjoy good jobs with rising wages; and a much lower-paid group of service-industry workers who take care of them.

  • As Eduardo Porter wrote in the New York Times earlier this month: There is a small island of highly educated professionals making good wages at corporations like Intel or Boeing, which reap hundreds of thousands of dollars in profit per employee.

  • Amazon said that it would still hire the 25,000 new people it planned to bring to New York, but would instead spread them across 17 regional hubs in the United States and Canada.

The Real Problem With The Amazon and New York Deal | Via: forbes.com

  • Amazon said on Thursday that they are cancelling plans to build a corporate headquarters in Long Island City, Queens after coming under harsh opposition from some local lawmakers and residents.

  • There is only one reason there are not endless takes on Amazon having walked away from the New York headquarters deal: the finite limit to people, outlets, and time since the company announced its decision.

  • You could choose among whatever angle suits your own predisposition, whether it was that Amazon being right and New York City politicians and residents were foolish, Amazon was the fool, New York denizens struck a blow for freedom, or the entire deal was not so hot from the start.

Looking At Amazon's Decision In Different Retail Light | Via: 2pm Newsletter [Requires Subscription]

  • Web Smith, publisher of 2pm, a newsletter that examines Direct to Consumer brands, argues that lost in the Amazon debate is the fact that we're not thinking about Amazon as a conduit to a strengthened eCommerce system -- one that future-proofed the city of New York from forthcoming recessions. "I believe that we must begin viewing investments into our eCommerce infrastructure no differently than our predecessors viewed their investments into roads, bridges, and tunnels," he writes in last week's issue.

  • He contextualizes Amazon by comparing it to the network of roads and infrastructure projects that helped connect Americans by the vast system of roads and freeways. "In this way, the people will always be at war with the two truths of Amazon, Inc: it’s a for-profit company and an American institution. It’s a company that’s so intertwined in our daily lives that one could say it’s analogous to the network of highways connecting us to the next cities."

  • Why is this a big deal? Because most anyone arguing for either side of the Amazon / NYC deal is forgetting to mention just how big of a player Amazon has on our country, well beyond that of just ordering stuff online. "Many digital publishers generate real revenue through Amazon’s affiliate programs, an outrageous number of vital websites rely upon Amazon for their web services (AWS). Amazon has control over what is, quite possibly, America’s most popular grocer – Whole Foods. Amazon owns millions of square feet in fulfillment centers and newly opened data centers to support global infrastructure. And of the 325.7 million people in America, over 100 million of them are Amazon Prime subscribers. Amazon ranks number two behind Walmart in American employment volume. These are but a few high level examples of Amazon’s influence."

  • Retail is technically still in its infancy. In 2010, online retail had a 4% penetration vs. physical retail. By 2018, that number rose to nearly 12%. It’s expected to reach 20% by 2025. What happens when eCommerce in America begins to mirror the growth trends seen in China? While eCommerce in the United States inches just past 12%, China is an example of what the industry looks like when 38% of its citizens shop that way.

After New York City’s War With Amazon, Uber Could Be Next | Via: nytimes.com

  • First Amazon. Next, Uber?

  • No legal challenge changes the fact that Uber made congestion on our roads worse and paid their drivers less than a living wage,” said Seth Stein, a spokesman for the mayor.

  • The two ride-hail companies have bristled over new regulations in New York, Uber’s largest market in the United States.
    Uber bought another bike company called Jump and began offering electric bikes in the Bronx and Staten Island.

  • Uber supports the driver pay rules, but argued that the cap hurts drivers who want to join its app.

  • “It is disappointing to see the de Blasio administration remain singularly focused on a cap that evidence suggests is doing nothing to relieve congestion while preventing thousands of New Yorkers from earning a living wage,” Josh Gold, a spokesman for Uber, said in a statement.

Google will spend $13 billion on U.S. real estate in 2019, expanding into Nevada, Ohio, Texas and Nebraska | Via: cnbc.com

  • Google doubled capital spending in 2018, but CFO Ruth Porat said that should "moderate" this year.

  • Pichai said the plans will likely create tens of thousands of construction jobs across Nebraska, Nevada, Ohio, Texas and Virginia, as well as Oklahoma and South Carolina, where the company is expanding existing data centers.

  • Pichai also said that the company is adding new office buildings in Texas and Massachusetts, building out more space in Illinois, Wisconsin, Washington state and Georgia, and redeveloping California locations near Los Angeles and in the Bay Area, including the Westside Pavillion and Spruce Goose Hangar .

Retail sales drop the most since September 2009 | Via: cnbc.com

  • U.S. retail sales recorded their biggest drop in more than nine years in December as receipts fell across the board, suggesting a sharp slowdown in economic activity at the end of 2018.

  • The Commerce Department said on Thursday retail sales tumbled 1.2 percent, the largest decline since September 2009 when the economy was emerging from recession.

  • Economists polled by Reuters had forecast retail sales increasing 0.2 percent in December.

National Retail Federation reflects on impact of digitization | Via: logisticsmgmt.com

  • As retailers expand into options like selling products that are drop-shipped directly from the manufacturer to the customer or selling their products through third-party online marketplaces like eBay or Amazon, the complexity is even greater.

  • Focusing on delivery time, customer satisfaction and supply chain transparency is going to become increasingly important for retailers and brands.

  • Data collected through e-commerce sales is critical to help retailers plan their supply chains down to the customer level.

'We were first': Faced with new competition, eBay wants to remind the sneakerhead industry of its roots | Via: digiday.com

  • In the early days of sneaker culture, there was no Stadium Goods, no StockX, no GOAT and no Flight Club.

  • While the number of platforms dedicated to the buying and selling of sneakers has ballooned in recent years, eBay is still chugging along as a viable platform for sneakerheads.
    The first pair of shoes I sold in 1999 was on eBay,” said Jeff Chan, head of sneakers at eBay.

  • Josh Luber, CEO of StockX, has told Glossy previously about how the early days of online sneaker resale were characterized by a sort of “wild west” feel.

  • For instance, a recent innovation lets sellers find a shoe already on the market and quickly create a listing saying they are selling a pair, rather than having to create their own listing from scratch.

  • Speaking of sneakers, a fascinating story is emerging of a long-lost pair of rare Air Jordan game-used sneakers that were found in an abandoned Milwaukee mall. They just hit the auction block and representatives at Heritage Auctions believe the shoe could go north of $20,000.

Redevelopment underway at former Sears site | Via: newsday.com

  • A former Sears store is undergoing a makeover into a movie theater, gym and smaller retail space in East Northport is on track to be finished this year. This is yet a contemporary example of what some of the shuttered Sears locations can turn into.

  • Redevelopment is underway at the former department store in the Huntington Square Mall at 4000 Jericho Tpke.

  • A multiscreen AMC movie theater, 24 Hour Fitness, Floor & Decor store and “small shop retail” space are slated for the site, and the “estimated substantial completion” of the construction work will occur by the fourth quarter of this year, according to a financial report the developer, Seritage Growth Properties in Manhattan, released in November.

The stunning drop in retail sales leaves Wall Street’s economists skeptical. Very skeptical | Via: marketwatch.com

  • The Commerce Department on Thursday said retail sales slumped 1.2% at the end of 2018 , marking the biggest decline in nine years.

  • One big red flag, for example, was a reported 3.9% decline in sales among internet retailers.

  • The last time internet sales fell that much was in 2008 at the height of the last recession.

Luxury Online Retailers Are Embracing In-Person Shopping. Here’s Why | Via: robbreport.com

  • Why Luxury retailers like Mr Porter are adding new programs that are decidedly more IRL, or "In Real Life."

  • Yet, even as more and more consumers shop online, some luxury online retailers are embracing an unexpected approach to fortifying their customer base: in-person services and brick-and-mortar spaces.

  • This, of course, is an extension of their online services, called MyStylist, a 24-hour personal shopping “concierge"

Retailers Should Pay Extra Special Attention To Kroger's Shelf Labeling Plans With Microsoft | Via: forbes.com

  • Kroger’s recently announced digital shelf labeling tests , at one store in Ohio and one in Washington, and done in partnership with Microsoft, are cool.

  • While it is neat to see digital displays come to life within a store, and while the label shelving substrate alone is enough to make someone feel like they suddenly walked into an episode of Star Trek: The Next Generation, the "tech," even with all its flashing fruit, should not overshadow why digital pricing displays are so important.

  • The real value in digital price signage lies somewhere else entirely, in that digital price signs finally level the playing field with e-commerce.

To protect its business, Kroger is building an Amazon-style flywheel | Via: digiday.com

  • With traditional retail being squeezed, and customers slowly shifting online, Kroger had to rethink its model, build an online business that would help capture customers’ shift to digital while still driving traffic back to stores.

  • The pieces — physical stores, Kroger Ship delivery service, Kroger Pick Up curbside delivery, an exclusive Our Brands product selection, its financial services program Kroger Personal Finance and retail media business, Kroger Precision Marketing — are being set up to work together to bring in new revenue streams and drive customers to spend more overall with the company.

  • Putting the pieces in place When McMullen announced the Restock Kroger program, he told investors the plan would generate $400 million in incremental operating margin by 2020, following a $1.3 billion investment.

  • Underpinning Kroger’s online grocery business is Kroger Precision Marketing, its retail media arm.

  • In the third quarter of 2018, the company said revenue for Kroger Precision Marketing was up 150 percent year over year and that its ad products resulted in 700 million product impressions for brand advertisers, which include PepsiCo and Nestlé.

  • Kroger is counting on a new ad business to drive higher-margin revenue from brands who will spend not just trade dollars, which get them better visibility in stores, but brand marketing dollars with Kroger.

Survey: More than half of U.S. retailers said they are just surviving | Via: dallasnews.com

  • More than half, or 54 percent, of traditional retailers say their businesses are just surviving as they head into 2019, according to a survey of big box, department stores, discount stores and specialty retailers by accounting firm BDO.

  • BDO's survey of 300 C-suite executives found two camps: "survivors," who report being stable and breaking even, and "thrivers," who identify as profitable and say they are experiencing robust growth.

  • "The majority of retailers are stuck in survival mode," said Natalie Kotlyar, a national leader of BDO's consumer products practice, in a report released Wednesday.

  • They're all spending money on their e-commerce operations, but one in three thrivers are planning to expand their store counts, including e-tailers.

Taylor Pipes

Taylor Pipes

I write stories about people that interact with technology that solves human problems. I love exploring and finding compelling stories at the intersection of technology and the future of work.

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