(Click chart to enlarge)
The other day my wife asked me to purchase a new fridge water filter from the hardware store. Just before I walked out the door I decided to check Amazon.com. I ended up ordering the filter through my Amazon Prime membership with two-day shipping, saving me a trip. Over the past few years, I have found myself going online more for my every day purchases.
The trend of consumers ordering more online has brought many traditional retailers to insolvency including Borders Books, The Sports Authority, and Circuit City, to name a few. Just as early as the year 2000, only 1% of shopping took place online. As of the end of 2016, over 8% of total retail shopping happened online, as added convenience and greater variety have been fueling the behavior change. Amazon has been one of the primary beneficiaries of this shift, as their stock price has increased substantially over the last ten years.
As traditional brick and mortar stores continue to go out of business, many mall properties have been trying to repurpose space and adding non-traditional tenants to fill vacancies. These non-traditional tenants include grocery stores, doctors’ offices, and other mom-and-pop shops. Those investing in the popular Real Estate Investment Trusts (REITs) should learn how much (if any) of the fund properties include malls and retail that may continue to be affected by these changes.
The US economy has adapted to changes like these for decades as technology advancements and consumer trends guide industry growth (and decline). I look forward to the next few decades to see what other advancements will come.
Thanks for reading,