Two weeks ago, we ran a story on the rise of urban wasteland called “greyfields” – and the concern laid out in an article in the Atlantic CityLab which pointed out that the retail sector had lost 30,000 jobs in March alone, “with thousands of store closings projected through 2017. At this pace, store closings in 2017 are likely to surpass the Great Recession year of 2008.”
They noted, “The proliferation of half-vacant shopping centers and abandoned malls on the fringes of cities has become such a pervasive problem that we have a new word for it: greyfields.”
That came just before the announcement that Amazon had bought out Whole Foods. Given that Whole Foods has closed in Davis, this is a move that does not directly impact us, except that it continues a trend.
In a press release a week ago, Stacy Mitchell, who a decade ago was warning of the dangers of big box and has recently been working as co-author of Amazon’s Stranglehold, made the statement: “Amazon’s acquisition of Whole Foods raises significant anti-competitive issues that should be deeply concerning to federal antitrust regulators and the public.
“This deal would allow Amazon to leverage the Whole Foods chain in ways that would expand its monopoly power in online commerce, including by integrating these locations into its rapidly growing logistics and delivery network. And it would give Amazon, which already sells more clothing, books, toys, and consumer electronics than any other retailer, a substantial share of an even bigger consumer goods category, groceries. Regulators should block this acquisition.”
There is a lot to digest in the report (see the full report here), but there are four main points of concern, each of which have implications for our community. The first is that Amazon is “monopolizing the economy.” Basically, the authors Stacy Mitchell and Olivia LaVecchia argue that it is “using its market power to eliminate competition and take control of one industry after another, leaving us with an economy that is less diverse and innovative, and which affords fewer opportunities for businesses to start and grow.”
They note, “Amazon is fueling a sharp decline in the number of independent retail businesses, a trend manufacturers say is harming their industries by making it harder for new products and new 
authors and creators to find an audience.”
It creates “a particular danger in the book industry, where its power to manipulate what we encounter, remove books from its search results, and direct our attention to select titles threatens the open exchange of ideas and information.”
For all the worry about Target threatening independent business and bookstores in Davis, it appears that Amazon has been far more effective and it has done so not only at the cost of local business, but at the cost of local sales tax share.
Second, for all of the talk about a $15 minimum wage, a huge threat to that movement is Amazon. They argue that Amazon is “undermining jobs and wages.” They write that “we examine Amazon’s labor model and find that work inside its 190 distribution facilities resembles labor’s distant past more than a promising future, with many workers performing grueling and underpaid jobs, getting trapped in precarious temporary positions, or doing on-demand assignments that are paid by the piece.”
They note, “Amazon has eliminated about 149,000 more jobs in retail than it has created in its warehouses, and the pace of layoffs is accelerating as Amazon grows. Many jobs are at risk: the retail sector currently accounts for about 1 in every 8 jobs, and unlike Amazon jobs, these jobs are distributed across virtually every town and neighborhood.”
Forbes this week argued, “Among the losers will be traditional neighborhood stores, which won’t be able to compete with Amazon’s razor thin operating margins – and minimum wage employees like cashiers, as Amazon’s technology will make them dispensable and speed up a trend already underway in traditional retail chains…and in the process, make the $15 minimum wage irrelevant.”
Ms. LaVecchia and Ms. Mitchell note: “Amazon is spreading its low-wage, precarious labor model to package delivery, threatening the jobs of nearly one million unionized, middle-income workers at UPS and the U.S. Postal Service. Amazon has leased cargo planes, purchased truck trailers, and lobbied for permission to fly drones as it builds a shipping system that could serve both its own needs and those of others.”
And, “As Amazon squeezes its workers, it’s also delivering enormous wealth to a handful of top executives and shareholders, and exacerbating income inequality. This year, Jeff Bezos passed Warren Buffett to become the third-richest person in the world.”
While the wage issue has traction in the Davis community, the biggest impact is that on community-based retail and commerce, where Ms. LaVecchia and Ms. Mitchell argue that Amazon is “weakening communities,” by “upending the longstanding relationship between commerce and place, changing the way that our communities feel and threatening the revenue streams and social capital that they depend on to function.”
This is part of the argument in the CityLab article, where there is a massive economic shift which threatens to upend local economies reliant on retail sales tax. The article notes, “E-commerce is booming, with a startling 50 percent of American households having an Amazon Prime membership. It’s the stores you have to drive to that are in trouble, reflected in rising retail vacancy rates in many metro areas.”
The article notes, “Some may find pleasure in the aesthetics of dead-and-dying malls, but they pose big challenges for the communities around them: Besides functioning as ugly, life-sucking border vacuums, defunct shopping centers represent lost tax dollars for cash-strapped municipalities.”
Ms. LaVecchia and Ms. Mitchell find that 135 million square feet of retail space has gone vacant due to Amazon – “the equivalent of about 700 empty big-box stores plus 22,000 shuttered Main Street businesses.”
They find four main local impacts caused by this.
First, “Property taxes are the leading source of revenue for state and local governments, and brick-and-mortar retailers shoulder a large share of this tax responsibility. As it displaces these businesses, Amazon, which has no property in 20 states and only a minimal footprint in the places where it does have warehouses, is not replacing this critical source of revenue.”
Second, “Much of the vitality of our cities is linked to commerce that is based on the street and the many encounters with neighbors and friends that occur as we run errands. At Amazon, shopping is a solitary activity, and this has profound implications for our communities and how we relate to one another.”
Third, “Local business ownership is a powerful source of social capital, as well as an expression of closely-held American values, like personal agency and community self-determination. In recent surveys, locally owned businesses name Amazon as the top threat to their survival.”
Finally, “Amazon’s invisibility and lack of a physical presence in most places makes it harder to build a grassroots response to its impacts. As it stealthily expands, however, it’s important to consider that not all e-commerce follows its example, and that we could instead support the many local businesses that are operating online while still rooted deeply in their communities.”
I think a lot of people in Davis kind of shrugged at the news of the Amazon purchase of Whole Foods, given that Whole Foods left Davis several months ago.
But I think, overall, this is the continuation and perhaps exacerbation of a trend.
As Forbes notes in their article: “While it’s still unclear how Amazon will re-organize Whole Foods, a video released on Amazon Go stores last year may provide a good hint—there will be no cashiers. They will all be replaced by technology, which monitors customers entering the store, records what they buy, and ensures that they are charged the appropriate amount.”
Amazon denies this of course.
“Amazon has no plans to use the technology it developed for Amazon Go to automate the jobs of cashiers at Whole Foods,” said, a spokesman for Amazon. “No job reductions are planned as a result of the deal” he said.
The problem of course is “other store chains will also have to do away with cashiers to keep up with Amazon, accelerating and broadening a trend already underway in the retail industry. Wal-Mart and Target have been using technology to replace labor that is usually paid the minimum wage.”
The way we see this: it’s just a continuation of the downfall of retail as a local revenue generator and driver of local economies.
—David M. Greenwald reporting
I am going to toss a tangential idea out there. I think that we may be seeing a major cultural as well as economic shift. There may be a concomitant upside to not having so much of our human interaction based on commerce/shopping.
I grew up rurally. We were poor, so shopping was not a pastime or entertainment. Our interactions were largely with our neighbors and often involved exchanges, my dad’s venison, quail or pheasant for a neighbor’s salmon, or apples or cherries from their orchard. These exchanges frequently involved going in to discuss local or national news. Over the past 50 years, that has changed in my hometown which is now homogenized with an economy and social interactions based largely on material acquisition just as is the case in more urban areas.
For better or worse, I believe that we are seeing another major shift in both how we acquire goods and how we relate to others. It seems that there is a reversal away from the actual acquisition being entertainment ( going out shopping with the girls) or hanging out at the mall to ….something else which we have not yet fully defined. Just as we may have to redefine how people will earn enough to live on, we may also have to redefine what is important in how we live.
In the end – none of that may be bad. The concern here is loss of local retail sales tax which we can fix by having the sales tax revert to the zip code and loss of jobs, which is another low level economic disruption.
Is it true that Amazon is not collecting local sales tax? I thought they were doing so in California in cases where the items are actually sold by Amazon. Of course, not all items on Amazon are sold by Amazon itself, and sales tax would not be collected in cases where the vendor/shipper has no California connections.
Tia,
In the end none of this is good. Understand that as David says, the cities lose needed sales tax as more as more on-line and Amazon on-line shopping occurs. Another negative consequence is that Amazon winds up becoming a monopoly, and then it also has a negative “domino effect” going upstream to drive more and more businesses under due to Amazon grinding down any profit for the manufacturer. That in turn loses our economy more jobs. That in turn hurts stock investors and therefore the stock market feels the impacts.
All of this is why it is so important to shop local as much as possible not only for the benefit of keeping our local retail healthy but for the sales tax benefits and the jobs it creates locally. The other down side of the Amazon-monopoly is it is not green. All of the boxes and energy used in shipping is a huge waste. I am not saying that on-line shopping or Amazon should not be an option at all, because sometimes you simply cannot get an item locally in town or within a reasonable driving distance. However, a good practice to consider is to see what you can get locally first and if you can’t find what you want, then perhaps shopping on-line or Amazon becomes your fallback option rather than your first “go-to” option.
Amazon and local retailers have much in common… they don’t make/produce anything… manufacturers have the costs of material, labor, design, packaging, shipping, and need to make a profit… that is the base cost of anything.
Retailers and Amazon add their costs to that, which includes store ownership/rental, labor, warehousing, more shipping, and more profit… does the “value added” of that effort create more costs to the end customer? You betcha’. Is it worth it? Depends…
A lot of the “packaging” occurs @ the manufacturer’s end. Whether Amazon delivers a product to your home, or a shipper delivers it to a local retail business, the “waste” produced is same order of magnitude in either case. If it comes to your home, you see it, touch it, dispose of it. If a local retailer does, you may not “see” all the waste, but rest assured the cost of recycling/disposing of it is built into the price you pay. And the waste is still there.
Sometimes I know exactly what I want… tend to do that on-line. Generally better prices. Sometimes I want to see, touch, evaluate a particular product. Then I tend to shop more locally. If it’s something I want/need ‘right now’, I definitely shop local.
No conclusions offered. But saying local retailing is somehow more ‘noble’ than on-line is spurious. A form of local “charity” if you will. Creating jobs, at a price.
As David says, there are other ways of skinning the “sales tax” cat…
Howard P,
I can’t say I agree that it is the same amount of waste when items are shipped in bulk to a store while individual items sent to individual home multiplies out eh shipping boxes and delivery including the energy to deliver by truck.
Further, the more local brick and mortar stores that Amazon knocks out, it just makes shoppers dependent on shopping on line and having to wait for an item as small as an extension cord that you need now, not in a few days and the delivery issues it would require. Keeping our local brick and mortar stores is essential for the reasons I already explained.
Depends what is being delivered… durable goods are packaged the same way, no matter who delivers. Manufacturer packages them.
Also, I did not say ‘same’ (why do people have this fascination of placing words in other folk’s mouths?)… I said “order of magnitude”. So, unless someone has a credible cite to the contrary, to demonstrate the separate total of Amazon-type deliveries wastes are more than 10 times the retail wastes, I stand by my comment.
Ok. Example: pruning shears. Standard unit of purchase is 12. I receive 12 in one box. Amazon ships out 12 pruners, each individually wrapped, in 12 individual boxes. Order of magnitude demonstrated.
Seed packets. I order 6 of each unit, dozens of packets in each reorder. All arrive in one box, usually 300+ packets. You order online, each order — as little as one packet if that’s all you want — shipped in its own box. Order of magnitude demonstrated.
Every item they ship by the ‘each’ that I order by the case demonstrates the order of magnitude.
Small “universe” to draw a conclusion… anecdotal, though your experience is your experience…
As I said, ‘depends’… could cherry-pick other anecdotal comparisons…
Was talking gross totals, across all products.
Um, no. Not even close.
Boxes are a waste, but overall I’m sure more energy is saved by going through Amazon than everyone driving to stores to pick up their goods. Would you rather have one truck delivering to your whole neighborhood or several cars driving in and out doing their shopping?
Boxes can generally be recycled (and, more and more come from recycled paper/cardboard)… styrofoam, non-rigid plastics, not so much. “Shrink wrap” is probably the worst.
Even if items are delivered in “bulk”, most have their own individual packaging, so you have to figure that in, too. Still ‘waste’…
Eileen
I agree with your post as written. I was hoping to convey a broader point. I think that as society, we would perhaps be better off if we were to shop less and interact in other ways more.
Tia,
Thanks for this since I misunderstood your post and I appreciate what you have explained here.
Howard P,
So, if I understand you correctly, perhaps you would be supportive of the Local Retailers Led (LRL) Coalition to repeal state and local sales taxes? If not, you might find it of interest.
The basic argument relies upon the same logic you have presented – i.e. a traditional retailer is re-defined as an “Order Fulfillment Destination Location” – similar to the Amazon Dropbox concept.
The main difference being that LRL Order Fulfillment is also accompanied by a service component defined as customer service (obviously a non-taxable service activity). In this instance, the LRL is simply using its storage shelving (similar to Amazon warehouse shelving) to temporarily inventory the out of state vendor (60% of all transactions) merchandise pending delivery to the end customer – at which point the transaction is finalized and the funds are remitted to the out of state vendor (minus local handling and service charges).
In essence, it is the same model that Amazon seems likely to propose for the new Whole Foods Order Fulfillment lockers (to accommodate all of its 3rd party facilitated sales/order fulfillments) in those locations lucky enough to be blessed with one of their full service Fulfillment Centers.
So, basically, the LRL Coalition – in respect of its customers’ hard earned incomes and dedication to shopping local – is proposing parity with the internet retailers in being granted relief from the burden of collecting sales taxes from its loyal customers. Seems only fair doesn’t it? I mean, why would you want to impose a unequal and unfair tax like that on your local customers. I keep hearing Sales Tax referred to as a “regressive tax” anyway, so why not repeal the darn thing?
Oh, and then while they’re at it, the LRL Coalition is also requesting a trailer bill which would relieve them from the onerous burden of local property taxes in the communities where their Order Fulfillment Centers are located. Nobody get’s why the large online retailers should be encouraged to build their new buildings out in the boonies just because of some sweetheart, subsidized property tax that never sees it way to the community where the purchaser actually resides.
Again, why burden the local Order Fulfillment operators with this burden. After all, they are already creating local jobs for the local economy and, more often than not, spending their lunch money locally. Sure, some may still be driving cars and be stuck paying local gas taxes, but are those local gas taxes important too – versus some big rig that refuels somewhere south of Bakersfield?
I’m not sure I have all the details just right, but thought you might find the discussion of interest.
You did not understand me correctly.
Did not find it of interest.
The $15 movement can be seen as a huge boost to Amazon too. The more local retailers have to pay for employees thereby upping the cost of their merchandise the better chance that people will turn to Amazon for cheaper goods.
Another offshoot of the $15/hr. wage, jobs lost to businesses having to find ways to save on employee costs so they go to automation.
This was happening before any minimum-wage went up
It’s certainly speeding up with many businesses now citing the $15/hr wage as to why they’re automating.
I can provide many links if needed.
https://www.forbes.com/sites/realspin/2016/11/29/thanks-to-fight-for-15-minimum-wage-mcdonalds-unveils-job-replacing-self-service-kiosks-nationwide/#7342c2654fbc
https://www.brookings.edu/blog/techtank/2015/09/30/rising-minimum-wages-make-automation-more-cost-effective/
http://www.businessinsider.com/minimum-wage-leads-to-job-losses-2017-3
There’s many more links where these came from.
I think it was inevitable
https://www.washingtonpost.com/amphtml/news/wonk/wp/2017/06/26/new-study-casts-doubt-on-whether-a-15-minimum-wage-really-helps-workers/
“The study, published as a working paper Monday by the National Bureau of Economic Research, has not yet been peer reviewed.”
It strikes me as too soon.
Shopping Downtown – no matter how you get there – is way more fun if there’s something social to do on the same trip. Farmers Market is proof of that. We have to make this easier to do without the car by providing a safe way for people to store purchases whilst doing other things.
Logistics for home delivery would be so much simpler if USPS or another single entity delivered everything and every manufacturer maintained their own warehouses for all of their distribution. Leaving aside the use of shopping with vehicles over-sized, over-risking and over-polluting for the task, it’s a huge problem that only USPS has access to mailboxes. UPS cooperates with them for certain deliveries and mailboxes are fine for small items, but it’s a mess, as all of us who have had various things purchased from online retailers stolen from our doorsteps. Not only does Amazon have access to AmazonLocker, but for reasons I don’t understand it’s not available to the third-party partners. Among other things it’s an inefficient use of space.
Logistics should be priced so that it’s done with the least amount of pollution, road damage and risk to others in collisions. The biggest problem here is that energy is extremely under-priced.
If there were AmazonLocker-type facilities not dedicated to one logistics company or retailer in several places Downtown and near the entrances of larger stores, a huge number of deliveries would not have to made into neighborhoods by truck as people would simply pick them up while visiting that location by owned car, carshare or cargo bike to do touch-shopping – as mentioned by Howard P. – or to buy things fresh and refrigerated. Home delivery would cost more, perhaps only for objects below a certain weight. The cost would be higher because logistics companies would pay an extra fee for every delivery address on a local street. People who can’t get out of their homes easily who can verify this would be able to get a rebate for the higher fee. The “local fee” would be a way for cities to incentivize more central-distribution.
Logistically-speaking, what Amazon already does with their ‘Locker service is quite common with other logistics providers in Europe. Many of the providers don’t actually use lockers but instead have a dedicated place in a secure area only accessible to employees. And FedEx and other providers – not to mention the USPS – make possible or require a pickup or dropoff at a facility, though this seems to be more about security of the delivered items than logistics-simplification.
The new model should be a kind of central mailbox, and it would probably have to come through stronger regulations on logistics. USPS could run it, or sub-contract it. Boxes should re-usuable, if even needed.
But still — look around, most traffic is not caused by FedEx, Amazon, USPS etc vehicles, it’s the result of – amongst other things – under-pricing of energy, parking minimums, high housing prices and safety-narcissism.
Dude, you come up with a new term everyday. Do you make them up or do they teach these somewhere?
I think at some point the Feds are going to have to step in and put the brakes on Amazon or they’re going to be the death of many local economies.
I expect that hosting an Amazon locker is a take-it-or-leave-it proposition. “You want an Amazon locker as a convenience for your customers and to drive more foot traffic? We’ll be happy to install one if it fits our business plan, but only if you agree to our terms. [I’m told those terms may feature a modest rent for the host location.] But we’re not about to allow anyone else access to our lockers.”
A 150 years ago many rural people ordered from the Sears Catalog and did not shop for durable goods in town. Life went on. People came to town because that is where other people were.
I have to agree with Tia that centering social engagement in shopping is undesirable.