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