Digital Economy: Broad Restructuring of the Economy and Daily Life by Ali Hangan

Ali Hangan writes:

Hi folks,

I hope you are enjoying your Summer. I recently visited my son. He is working in Fortuna, CA. A small rural outpost, located off Highway 101 in Humboldt County, dotted with strip malls and sparse retail establishments. Without a car and few places to shop, I assumed he would have a chance to save a substantial amount of money. He revealed he had spent his entire first two paychecks, but managed to save his money from the last couple of checks he received. Feeling relieved that he had saved some of his money, I asked him how he was able to shop so much without a car? His reply, “I ordered everything from Amazon.”

My conversation with my son illustrates the extent e-commerce’s is taking over the retail space. Any consumer can access a global bazaar of products and services from any location in the world from a smartphone. Secondly, towns with small populations are at a disadvantage in the new age of e-commerce in keeping retail jobs. The more labor intensive retail activities, such as filling orders and stocking shelves, are being situated closer to urban markets to shorten the supply chain to cut cost and maximize efficiency. Another aspect of the process is demographics: My 19-year-old son, like many in his generation, view the smartphone as the first step to engaging the retail environment.

Beyond the shrinking of jobs, e-commerce is impacting broader sectors of the economy related to retail. For instance, commercial real estate and holder’s of commercial debt (i.e. banking) can expect a loss of market value and return on investment, due to the decline of brick and mortar storefronts. Moreover, cities that have long relied on retail taxes to pay for city services, finance capital improvement bonds, and maintain public employee pensions, will confront fierce headwinds to meet their financial obligations as tax revenue withers away.

In sum, the digital revolution cannot be viewed as industry specific, but a broad restructuring of the economy and daily life. The articles that follow illustrate the ebb and flow of the decline of brick and mortar retail, in light of e-commerce, throughout rural and suburban America.

One love,

AH

New York Times

In Towns Already Hit by Steel Mill Closings, a New Casualty: Retail Jobs

Thousands of workers face unemployment as retailers struggle to adapt to online shopping. But even as e-commerce grows, it isn’t absorbing these workers.

By RACHEL ABRAMS and ROBERT GEBELOFFJUNE 25, 2017

JOHNSTOWN, Pa. — Dawn Nasewicz comes from a family of steelworkers, with jobs that once dominated the local economy. She found her niche in retail.

She manages a store, Ooh La La, that sells prom dresses and embroidered jeans at a local mall. But just as the jobs making automobile springs and rail anchors disappeared, local retail jobs are now vanishing.

“I need my income,” said Ms. Nasewicz, who was told that her store will close as early as

00retail-6-superJumbo

Sporting Goods store going out of business in Johnstown, PA.

August. “I’m 53. I have no idea what I’m going to do.”

Ms. Nasewicz is another retail casualty, one of tens of thousands of workers facing unemployment nationwide as the industry struggles to adapt to online shopping.

Small cities in the Midwest and Northeast are particularly vulnerable. When major industries left town, retail accounted for a growing share of the job market in places like Johnstown, Decatur, Ill., and Saginaw, Mich. Now, the work force is getting hit a second time, and there is little to fall back on.

Moreover, [read full story here]

* * * * * *

Forbes  magazine/ Bloomberg News

Amazon Robots Poised to Revamp How Whole Foods Runs Warehouses

The retailer could bring its distribution technology to the grocery chain
By
Spencer Soper and Alex Sherman
June 26, 2017, 4:00 AM PDT

When Amazon.com Inc.’s $13.7 billion bid to buy Whole Foods was announced, John Mackey, the grocer’s chief executive officer, addressed employees, gushing about Amazon’s technological innovation.

“We will be joining a company that’s visionary,” Mackey said, according to a transcript ofth the meeting. “I think we’re gonna get a lot of those innovations in our stores. I think we’re gonna see a lot of technology. I think you’re gonna see Whole Foods Market evolve in leaps and bounds.”

A major question about the acquisition is what Amazon’s technology will mean for those Whole Foods’ workers. Will it make their jobs obsolete?

In negotiations, Amazon spent a lot of time analyzing Whole Foods’ distribution technology, pointing to a possible way in which the company sees the most immediate opportunities to reduce costs, said a person familiar with the matter who asked not to be identified because the issue was private. Amazon, through a spokesman, declined to comment, as did Whole Foods.

Experts say the most immediate changes would likely be in warehouses that customers never see. That suggests the jobs that could be affected the earliest would be in the warehouses, where products from suppliers await transport to store shelves, said Gary Hawkins, CEO of the Center for Advancing Retail and Technology, a Los Angeles nonprofit that helps retailers and brands innovate. As Amazon looks to automate distribution, cashiers will be safe– for now.

“The easiest place for Amazon to bring its expertise to bear is in the warehouses, because that’s where Amazon really excels,” Hawkins said. “If they can reduce costs, they can show that on the store shelves and move Whole Foods away from the Whole Paycheck image.”

Amazon sees automation as a key strategic advantage in its overall grocery strategy, [read full article here]

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