The Amazon Effect: RadioShack and Staples to Close Stores

RadioShack’s shares fell by 24 percent after holiday sales came in dramatically under expectations. The company has now announced that it will shutter 1,100 stores, leaving 4,000 brick-and-mortar locations in the U.S. Meanwhile, Staples announced that it would close 225 stores by next year, as the office supply superstore continues to move its business online, which already accounts for half of its total sales. Can physical retail stores survive in an Amazon-dominated world?

“RadioShack’s long slide coincides the steep ascendance of Amazon as America’s great brick-and-mortar destroyer,” reports The Atlantic. “In 2003, Amazon and RadioShack each had about $5 billion in sales. Last year, Amazon had $75 billion to RadioShack’s $3.5 billion.”

“At the end of 2013, RadioShack had 5,000 brick-and-mortar stores with 27,500 employees and $3.5 billion in sales, which is $127,000 in sales per employee,” notes the article. “Its website is the 1,066th most popular in the world. At the end of 2013, Amazon had zero brick-and-mortar stores with 117,300 employees (full- and part-time) and $75 billion in sales, which is $640,000 in sales per employee. Its website is the 5th most popular in the world.”

Sales at Staples were down 13 percent for Q4 2013 and 5.2 percent for the year (the company closed 46 stores in 2013). Staples recorded $23.1 billion in total sales for the year, $11.5 billion of which were online sales.

“A year ago, we announced a plan to fundamentally reinvent our company,” said Staples CEO Ron Sargent. “With nearly half of our sales generated online today, we’re meeting the changing needs of business customers and taking aggressive action to reduce costs and improve efficiency.”

“Staples may not be the first retail name when you think of for e-commerce or technology, but as companies like Amazon and Walmart encroach further into its territory, it has been working to change that,” reports TechCrunch. “The company says it sells some 500,000 products online now, compared to 100,000 a year ago. And last year, it acquired Runa, a specialist in e-commerce personalization technology, to help enhance the customer experience on its platform.”