How Amazon Destroys Hundreds of Thousand of Jobs

By Douglas A. McIntyre Updated Jan 13, 4:39AM EST · Published Aug 12, 9:10AM EDT

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How Amazon Destroys Hundreds of Thousand of Jobs — © Thinkstock

Macy’s Inc. (NYSE: M) will close 100 stores in early 2017. In total they probably employ something like 20,000 people. It has closed a number of stores already. The numbers at Gap Inc. (NYSE: GPS) are worse — 175 stores. The list of layoffs by traditional retailers stretches ever longer. Almost every company blames e-commerce, which indirectly means Amazon.com Inc. (NASDAQ: AMZN).

Amazon is a model of efficiency. Its revenue will be well above $100 billion this year (a small amount of which will come from cloud operation Amazon Web services) with 230,000 workers. Macy’s has 150,000 before its layoffs. Macy’s will be lucky to have revenue of $25 billion in 2016. And it will be lucky to make more than a tiny amount of money.

Layoffs across the brick-and-mortar retail industry have begun but are not nearly over. E-commerce sites attached to each of these companies are modest in terms of revenue production and only a small fraction of total sales. In many cases, retailers do not even break out e-commerce sales numbers. They are too pathetic and would alarm shareholders more than they have been alarmed by store revenue.

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Even giant Wal-Mart Stores Inc. (NYSE: WMT), with its outsized store system, revenue and balance sheet, has had to resort to M&A to buttress e-commerce, as it bought Jet.com for $3.3 billion. Still an immature company, Jet.com is far from proving it can help Wal-Mart in any substantial way.

Scattered across the industry, other giants are in deep trouble and will have to continue closing stores. First among these is Sears Holdings Corp. (NASDAQ: SHLD), which owns Sears and Kmart. It has closed stores already, but its revenue continues to contract. There is no chance it can continue to support its 178,000 workers. As it shutters stores, the layoffs almost certainly will be in the tens of thousands.

The critical holiday shopping season is a little more than 100 days away. In some cases the holiday season drives 100% of a retail company’s profits. Whatever happens to retailers this year, it could get worse after the first of next year.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.