Readers Like Amazon Prime

We can’t draw any definitive conclusions from the recent non-scientific Sunday Poll, but it’s clear from other data that Amazon Prime is a hit. From July:

Amazon Prime members now make up more than half the online retailer’s customer base, according to a new study.

Consumer Intelligence Research Partners estimates that Amazon  counts 63 million Prime members among its shoppers—an increase of 19 million from last June. (Fortune)

As I posted Monday, retailing continues to change. A century ago the Sears catalog was a big deal, offering everything you could imagine — including house kits. The Sears mail order catalog began in 1888, Montgomery Ward was earlier: 1872. National & regional retail stores survived the mail order catalog revolution and all the many changes since.  Retailers that survive must adapt & change with the times. Can you imagine a retailer not accepting credit cards? Even ALDI had to change and accept more than just debit cards.

The recent poll results:

Q: Are you currently a paid member of any of the following (check all that apply):

1. Amazon Prime 24 [36.92%]
2. Sam’s Club 18 [27.69%]
3. Costco 12 [18.46%]
4. Not a member of any 11 [16.92%]
5. Google Express 0 [0%]
6. Walmart Shipping Pass 0 [0%]

I’ve been an Amazon Prime member for at least 5 years now. While it costs $99, it allows me to order things without concern for the shipping cost. We order often enough that it is a good value, we occasionally watch videos too. In July 2015 we joined Costco, shopping there once per month since. Last month we got a 16.6 cu ft upright freezer (yes, Energy Star rated) so we’ll be buying even more there.

While Costco is debating the best approach to e-commerce, its competitors are acting fast. Amazon continues to open dozens of warehouses a year to accelerate shipping times. Its Prime membership program may now be Costco’s closest competitor, as Prime offers a number of perks including free two-day shipping for a $99 annual fee. There is significant overlap between Prime and Costco members, but that could change if consumers find themselves shopping on Amazon more than Costco.

Wal-Mart (NYSE: WMT) has also been rapidly expanding its grocery pick-up program, with plans to have about 1,000 kiosks in store parking lots by the end of next year. Management has said the program has been very popular. The company also acquired Jet.com for $3.3 billion to advance its own e-commerce operations.

In addition, Kroger has implemented a similar click-and-collect grocery program that allows customers to order on their phones and pick up in groceries in a store parking lot. (USA Today)

Locally owned retailers will continue to need to stay relevant to survive & thrive.

— Steve Patterson

Demographics & Technology Continues To Change Retailing

Around Halloween each year I think more and more about retailing. Not because I’m into mass consumerism, but because of the five years I spent working at Toys “R” Us (1983-87). I also briefly worked at Dillard’s for a few months in 1988. Architecture school became too demanding, so I stopped working my last two of five years in college. In architecture school I took an interest in retail design.

Growing up in the 1970s, retailing was represented by Sears, Montgomery Ward (their catalogs too!), and Oklahoma stores like C.R. Anthony, TG&Y, Otasco, etc. Looking back on my personal experience, I realize just how much retailing has changed in my almost 50 years. My parents & grandparents saw considerable change in retailing during their lifetimes (1886-2007 range).

Today we have our phones out when in brick & mortar retail stores. I use a grocery app daily — I’ve added non-grocery stores for other items as well. Recently, in Target, we saw the Elf on a Shelf and decided to finally get it. A quick scan of barcode within the Amazon app showed us the price was the same at both stores, so we bought it at Target. We paid sales tax by buying at Target, but we got 5% off by using our Target RedCard MasterCard. However, we’re currently getting 5% cash back through Amazon using our Discover card. We paid more — the amount of sales taxes — so we could have it immediately. An informed decision.

My experience at Toys “R” Us was very different. I stocked shelves, but also worked as a cashier. Though part-time, I became a head cashier that trained and supervised other cashiers. In those days we had to key in a 6-digit stock keeping unit (SKU) for every item — no scanning a barcode. The register knew the price — assuming the price sticker on the product and computer were both updated. After we had the total sale amount we’d fill out a credit card form  and do an imprint of the card on the form. We had to enter the card number into the register to get an authorization code, which was then written on the form.

The truth is that the credit card imprint is nothing new. That’s how all transactions were handled in the days before the magnetic strip. It seems silly to have to explain this, but believe it or not, there are these imprint machines that are entirely mechanical. The merchant places the card on a steel plate on the imprinter and a credit card form is placed over it (it used to have “carbon paper” for those old enough to remember). The merchant slides an arm over the whole thing, and the pressure from the arm imprints the raised numbers on your card onto the paper form. It contains all the important information, such as card numbers and expiration date. (NerdWallet)

My point is retailing has continuously evolved since the first retail transaction. Once-giant retailers, like Sears, barely survive today. Some mom & pop stores go out of business, while others grow to become Nike, Spankx, Whole Foods, etc. With Millennials outnumbering Baby Boomers and Gen-Z shoppers entering the picture you can expect retail to continue changing.

Amazon is trying to stay ahead of these changes. As Amazon Prime members we’re used to getting things in two days, very fast compared to the old days of pre-internet mail/phone order from catalogs.    But sometimes you can’t wait 2 days. Google Express offers next-day delivery from local stores in St. Louis, with same-day delivery in some markets. Very soon Amazon will open two huge facilities in the Metro area —  from June:

Online retail giant Amazon announced Thursday that it would build two distribution centers in Edwardsville, bringing 1,000 new jobs and adding a big name to a growing distribution and logistics hub in the Metro East.

Known as “fulfillment centers,” the Amazon warehouse and distribution facilities service a growing cadre of online shoppers by storing and shipping goods to consumers who want them fast. One center will handle large items — big screen TVs, sports equipment or kayaks — while another will handle smaller items such as books and electronics.

Amazon has about 50 of the centers, and as online retail competition grows, the company is looking to meet the fast delivery times promised by its premium service, Amazon Prime. (Post-Dispatch)

How fast? Try 2 hours, or 1 hour for an additional fee!

We’ll be in Chicago for four nights in mid-February, so I’ll try Prime Now there. I’ve looked through the app and it’s largely groceries and Amazon’s own electronics. If it’s cold & snowing having them deliver groceries from Eataly would be nice. The walk is less than 10 minutes from the condo where we stay, but making fresh pasta and staying in might be nice. Prime Now also does restaurant delivery.

Amazon isn’t stopping there, they’re testing a brick & mortar store:

The first Amazon Go location is situated in Seattle and is only available to Amazon employees until early 2017. It looks like a typical small grocery store with one thing missing–cashiers. 

Amazon Go has no cash registers and no lines because customers do not have to check out. Instead, they check into the store using an Amazon Go app on their smartphones. Sensors placed around the store detect what customers take off the shelves, and the company automatically charges their established Amazon accounts when they leave. It’s like shoplifting, except you pay for stuff as you walk out of the store. (PBS)

Hard to say today what impact all this will have long term, but it’s safe to assume the retail industry will continue changing and adapting. Those that don’t will fade away.

— Steve Patterson

Sunday Poll: Are You Currently A Paid Member Of A Warehouse Club or Online Free Shipping Club?

This is the time of year that many associate with shopping, but we all buy things throughout the year. Warehouse clubs Costco & Sam’s, both started in 1983, have millions of paid members.  You must pay an annual fee to shop at either.

In 2005 Amazon started their paid Prime service, offering “free” 2-day shipping on many items regardless of how small the amount. Paying up front for free shipping throughout the coming year was a new idea in 2005.

Out of curiosity, I’d like to know how many of you are currently paid members — or not. You can also add one not listed.

The poll will close at 8pm. Tomorrow I’ll post more on modern retailing, Wednesday will be the results from this poll along with my thoughts.

— Steve Patterson

St. Louis Board of Aldermen: New Board Bills 12/9/2016 (204-206)

The following three four Board Bills will be introduced at today’s meeting of the St. Louis Board of Aldermen, review the agenda here.

B.B.#204 – Vollmer – An ordinance approving a Redevelopment Plan for 5006-5030 Daggett.

B.B.#205 – Coatar – An ordinance entitled “Building Energy Awareness”; the purpose of this ordinance is to establish an energy benchmarking and reporting requirement for certain buildings.

B.B.#206 – Vaccaro – An Ordinance establishing a stop site for all eastbound traffic traveling on Mardel, (a one-way street) at Clifton and all northbound and southbound traffic traveling on Clifton at Mardel, causing it to be a three-way stop site at the intersection of Mardel and Clifton, and containing an emergency clause.

B.B.#207 – Ortmann – An Ordinance establishing a four-way stop site at the intersection of Indiana and Pestalozzi by regulating all northbound and southbound traffic traveling on Indiana at Pestalozzi and regulating all eastbound and westbound traffic traveling on Pestalozzi at Indiana, and containing an emergency clause.

The meeting begins at 10am, it can be watched online here.

— Steve Patterson

Opinion: Downtown Needs a Form-Based Code, Not An Old Height Restriction

The building at 620 Market, like most, has had numerous uses since it was first built, I recall attending a meeting at East-West Gateway when they were on the 2nd floor — back in the 90s. The most recent occupant was Mike Shannon’s restaurant, which closed January 30, 2016.

When St. Louis’ Chinatown, known as Hop Alley, was razed in the 1960s for Busch Stadium (1966-2006), a 35 ft height restriction was placed on the 620 Market deed. A taller building could have allowed occupants to look down into the new stadium. For a decade now the replacement Busch Stadium has been to the South and the old site a slowly developing mixed-use project between the Cardinals & developer Cordish, called Ballpark Village. Ironically, Phase 2 of Ballpark Village will include a tall building where occupants can look down into the current stadium.

Meanwhile, Mike Shannon has been trying to sell 620 Market. I’m sure, for the right price, he could find buyers willing to accept the 35 ft height restriction. Like anyone who owns real estate, he correctly views the substantial public & private investment in Ballpark Village as increasing the value of his property. Shannon’s former employer, the Cardinals, don’t want to agree to lifting the height restriction unless they get a say in what may replace the current building.  See Messenger: Mike Shannon takes on the Cardinals in battle to sell his building.

Results from the recent Sunday Poll:

Q: Agree or disagree? Cardinals/Cordish should get to approve/reject proposals for Shannon’s site in exchange for releasing 35ft height restriction.

• Strongly agree 1 [4%]
• Agree 0 [0%]
• Somewhat agree 3 [12%]
• Neither agree or disagree 4 [16%]
• Somewhat disagree 1 [4%]
• Disagree 6 [24%]
• Strongly disagree 9 [36%]
• Unsure/No Answer 1 [4%]

I’d forgotten to uncheck the option allowing user-entered answers, I turned it off after the first, which read: “no subsidy for Cordish unless restriction lifted” Agreed, but that should read ‘no ADDITIONAL subsidy for Cordish unless restriction lifted’.

This is another demonstration of failed urban design policy in St. Louis. Within the central business district the only regulation on height of new construction should be minimum height — not maximum.  Issues such as heights and design could easily be addressed within a form-based code, replacing our 1940s use-based code. Even a form-based overlay for Ballpark Village and surrounding a decade ago would’ve been a good idea.

St. Louis would rather battle parcel by parcel rather than determine a larger vision through a public process. Great for those in control, bad for creating a healthy city.

— Steve Patterson