Personal Finance

Retail report: Will stores be swamped by changing habits?

Retailing in America has never been easy. The business eats its young and old alike. Consumers are fickle and investors are impatient. It’s a business model with a shallow moat around it.

That moat continues to be drained away by Amazon.com. Just ask Macy’s. Last week, the department store giant reported disappointing quarterly sales. It also cut its profit outlook for the rest of the year. The sour news sent Macy’s shares down to their lowest level since 2011.

Meantime, Amzon.com shares are near all-time highs.

In the week ahead, more than a half dozen national retailers are scheduled to announce their quarterly results, including Walmart on Thursday. The biggest brick-and-mortar retailer in the U.S. is coming off its first ever year-over-year decline in revenue. As far as sales are concerned, the biggest retailer got a little smaller last year. Walmart has been closing stores this year, most of them smaller outlets that started as an experiment five years ago.

Retailers can be economic barometers for their shoppers. For instance, when Home Depot and Lowes report their quarterly results on Tuesday and Wednesday, they will be gauges of the construction and housing markets.

Survival in retailing takes size and selection. Publicly traded retailers need to be big enough to leverage low prices from their suppliers, and selective enough to stock exclusive items not found every place else. At the same time, they have to be nimble enough to swap out merchandise that’s not moving almost as fast as it takes shoppers to surf to a new webpage, lest they be swamped by their own moat.

Financial journalist Tom Hudson hosts ‘The Sunshine Economy’ on WLRN-FM in Miami. Follow him on Twitter @HudsonsView.

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