I see that the editors of the New York Times are now worried about something I’ve warned about since the “stay at home” directives first began to be issued:
Unfortunately, the federal $2 trillion coronavirus stimulus package does little to mitigate retailers’ woes, despite their executives’ pleas for relief, though the Federal Reserve is working to ensure that larger companies have continued access to credit markets. The aid plan gives tax relief for prior property improvements, and it establishes a $350 billion fund for small-business loans that could help those firms maintain payroll and rent, but little else.
Though the cracks in bricks-and-mortar retail began forming years ago, the widening coronavirus outbreak stands to hasten physical retail’s decline and strengthen the monopoly hold of Amazon and other online giants. Such a consolidation of power among just a few retailers threatens to leave consumers with higher prices and less choice.
During the pandemic, reliable delivery of essentials like milk, eggs, toilet paper and cleaning supplies has been a lifeline for those who are reluctant or unable to venture outside their homes — Amazon-branded trucks have remained a familiar sight in residential neighborhoods. The competitive advantages of Amazon’s meticulously constructed worldwide logistics network, built to shuttle nearly every imaginable item to customers in as little as an hour, are especially evident in this crisis.
While many other traditional retailers are struggling with falling demand, Amazon has pledged to hire 100,000 temporary workers to keep up with it. Several other retail giants, including Walmart and Target, have kept pace with coronavirus quarantine demands by keeping physical stores open and leaning on their own delivery networks for grocery shipments and other necessary items. Walmart plans to hire 150,000 new workers.
Even in less frantic times, Amazon has been criticized for its workplace culture and its heavy-handed tactics with sellers. Last year, The Wall Street Journal contended that Amazon may be losing control of its own marketplace, allowing dangerous counterfeits to appear on its virtual shelves that would never pass muster at traditional retailers. Both Walmart and Amazon have quashed unionization efforts.
Amazon and Walmart have offered critical delivery services during this crisis, but regulators and elected officials should not lose sight of the dangers of monopoly power falling into the hands of the fortunate few that survive the coronavirus fallout.
My beloved Happy Foods continues to offer home delivery. It always has but that has increased substantially during Illinois’s “stay at home” directive. Indeed, the panic-buying of a week or so ago has gone a long way to redressing the damage that the city did to it over the last couple of years. Both Jewel and Mariano’s both now offer home delivery. At least in Chicago people don’t need Amazon to get “milk, eggs, toilet paper and cleaning supplies” without walking into a store. Is it different in other places?
Amazon’s real competitive advantage resides in its ability to sell and deliver clothing and everything else that people buy. My first suggestion was that Amazon be prohibited from selling anything other than essentials during the crisis.
My second suggestion was that it, along with Google and Facebook, be made so busy with the “war effort” that they wouldn’t have the resources to expand their monopolies. That’s what happened during World War II. IBM became IBM because it didn’t participate in the war effort and its much larger competitors were too busy manufacturing machine guns to introduce new products. My last suggestion was that, once the crisis is over, the Federal Trade Commission start working overtime in breaking up monopolies.