Sunday Delivery May Be Amazon's Knockout Blow
NEW YORK ( TheStreet) -- For a company that is barely profitable, Amazon
Amazon recently announced that it has reached an agreement with the United States Postal Service to start delivering packages on Sundays.
That could be the proverbial "knockout blow" for some retailers. There will no longer be any need for weekend trips to the shopping mall. While that will be harmful for Wal-Mart, Nordstrom, Kohl's and others, it could be potentially fatal for JC Penney.
Although the stock market is reaching record levels, the feeling on Main Street is hardly bullish.
Last month, the Conference Board announced that consumer confidence index plunged to 71.2 in October from 80.2 in September. The Thomson Reuters/University of Michigan data reported a plunge from September's 77.5 to 73.2 in October. The government shutdown, the impact of ObamaCare, and the concerns of the average American about their own personal financial situation has resulted in the loss of consumer confidence.
Since consumer spending accounts for about 70% of the American gross domestic product, that is very troubling, particularly for the traditional retail sector.
As a result, Americans are looking to save wherever possible and to also protect the environment. While gasoline prices have been slipping, fuel still accounts for a significant part of the budget for the average family in the U.S. In addition to being pressed for money, Americans do not have much free time, either.
During the peak holiday shopping season, there are high school and college football games on Saturday and National Football League games on Sunday. Given the choice between attending the local game on Saturday and staying home and watching a professional football on Sunday or some other leisure activity, it is likely that more families will choose to forgo a trip to the mall. That will save both time and money, while protecting the atmosphere from exhaust fumes now that Amazon can deliver on both weekend days.
Like any contest between seasoned competitors, there has not been just one blow from Amazon that has finished off many in the retail sector such as Borders and Circuit City.
It has been a combination of relentless, scoring attacks that have degraded the ability of so many retailers to compete. Amazon has expanded from primarily selling books to increasing its turf in consumer electronics to now going after the grocery market in affluent areas. The new Sunday delivery service will enhance the appeal of many of the items sold by Amazon.