It’s a dour time for many traditional retailers.
Macy’s is closing 40 stores and laying off employees, Bed Bath & Beyond reported third quarter profits fell 21% compared to the previous year, and Gap’s stock has tumbled by about 50% over the last year.
The holiday season didn’t bring much cheer, either. Uniqlo, Zumiez, Gap and Macy’s reported sales declines.
And while some of them—such as Macy’s—reported increases in online sales, they weren’t even close to outperforming online-only retailers such as Amazon, which is also poised to break $100 billion in revenue in 2015. Macy’s CEO Terry Lundgren said in a statement that the department store broke its own record by filling 17 million online orders during November and December. Amazon, by contrast, filled 23 million on Cyber Monday (Nov. 30) alone.
Online-only competitors to traditional retailers are snatching away market share, driving down prices and forcing companies such as Bed Bath & Beyond to make big investments to catch up in the online marketplace, said Deutsche Bank analyst Mike Baker in a report.
It’s easy to see why retailers are interested in boosting their online presence. US retails sales grew by 7.9% during the holiday season in 2015. Online sales grew 20% in the same period.