Hhgregg, The Limited and Wet Seal are among the retailers that have gone broke this year. Others, like Macy's, J.C. Penney and Urban Outfitters, are closing stores.
But wait. Unemployment is low. Consumer confidence is strong, and credit card debt is as high as it has been since the end of the Great Recession. Shoppers clearly are buyers. And we are still buying the same stuff: furniture, clothes and toys. But how and where we are buying is changing. This is the Amazon effect.
While it's hurting some retailers, it isn't killing retail. Monthly retail sales were up 5 percent in March. That includes in-store and online, including mobile. Sure, e-commerce is growing faster than brick-and-mortar, but retailers keep stocking their shelves and we keep consuming. It's relevancy and price competition that injures and kills retailers. Just ask Sears or RadioShack.
Wal-Mart sells more than $1 billion of merchandise per day. On Thursday in the week ahead, the company is scheduled to release its first-quarter financial results. The period was the first since Wal-Mart canceled its effort to compete directly against Amazon Prime's free two-day shipping service. Instead, Wal-Mart's newest strategy to battle the Amazon effect is just a few weeks old. In April, Wal-Mart began discounting items shoppers buy online and pick up in stores. Investors will want to hear about any early results and plans to expand the service this quarter.
So far this year, Wal-Mart stock has been a better investment than the S&P 500. It also has performed better than more than half of the stocks in the Dow Jones industrial average. Clearly, investors think Wal-Mart and its customers are up to the challenge presented by the Amazon effect.
