Retailers That Went Bankrupt During Age Of Amazon

By Douglas A. McIntyre Published Feb 17, 11:23AM EST

Quick Read

Amazon Dominated Online Retail
Some Retailers Had Too Many Stores
A Few Big Retailers Have Survived

Follow 24/7 Wall St. on Google

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

Retailers That Went Bankrupt During Age Of Amazon — © Public Domain / Wikimedia Commons

Amazon (NASDAQ: AMZN | AMZN Price Prediction) was founded in 1994. It went public in 1997. Like most online businesses, it was boosted by the dawn of broadband. Broadband penetration reached 40%-50% in 2005/2006. It was about that time when retailers said Amazon had started to destroy their brick-and-mortar business. Business Insider wrote in 2007, ‘The ‘Amazon effect’ began the retail apocalypse, as sales slumped and stores closed at retailers like Sears and Toys R Us.’

Which retailers were destroyed by Amazon? Several researchers and retailers have tried to answer the question. Each has a slightly different list. Certainly, the Business Insider list is correct. AARP added A&P, Big Lots, Blockbuster, Borders, Fotomat, Gadzooks, Gimbels, Hecht’s, Henri Bendel, Joann, Levitz Furniture, Party City, RadioShack, The Limited, The Sharper Image, Tower Records, and Woolworths. It is worth noting that, despite their size, these are niche retailers.

A better question might be which retailers were not destroyed. These are primarily stores that offer substantial discounts, big-box retailers, and home improvement stores. The first survived because of price, whereas the second survived due to inventory and the number of locations.

TJX (NYSE: TJX), Dollar Tree (NASDAQ: DLTR), Dollar General, and BJ’s fall into the deep discount category. Amazon and its third-party retailers may not be able to make money if they attempt to match these prices.

The group that enjoys robust success is the big-box retailers. This group includes Costco (NASDAQ: COST), Target (NYSE: TGT), and Walmart (NYSE: WMT). By revenue, Walmart ranks first among retailers. Costco ranks third, and Target eighth. Each has a broader range of inventory than niche stores do.

The final two retailers that avoided the Amazon Effect were Lowe’s (NYSE: LOW) and Home Depot (NYSE: HD). Their success largely depends on the fact that much of what they sell cannot reasonably be delivered through Amazon’s traditional channels. Many of these items are too large.

It may be that the “Amazon effect” is over. Those store chains that survive appear to have effective formulas.

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.