The Slow Death of Retail

Jan 04

The Slow Death of Retail

Posted by: George Grundy

Champagne corks were conspicuous by their absence as Amazon recently announced plans to expand their operation in Australia by opening a new warehouse in Perth.

Australia’s ‘boom to bust’ capital is experiencing its weakest economy in over two decades, and retailers have borne the brunt as the commodity miracle has come spectacularly to an end.

At the mineral boom’s zenith, more than a 747-full of people were arriving to live in WA each week, but the one dimensional nature of Australia’s economy is doubly so in its largest state. A collapse in mining activity and employment has had the downstream effect of pulling the rug out from Perth’s retail community. Now Amazon seems ready to twist the knife.

Amazon Australia’s Craig Fuller spoke of ‘investment and development’ bringing benefit to the local economy as the company expands its reach across the Nullarbor, but evidence elsewhere suggests a very different future.

In the US, Amazon paid no federal income tax in 2018, despite generating $11 billion in profits. Year on year, the company seems able to find ways of paying desultory rates of tax, and could be described as a ‘market leader’ in the use of credits and exemptions to reduce its tax liabilities. As an employer, Amazon has grown to such a size that its arrival is often so desperately sought that the company receives municipal deals offering tax and other breaks and incentives, yet the overall value provided to a community is questionable.

The 950,000 square foot distribution centre that opened in 2012 in San Bernadino, California, promised more than 1,000 new jobs to one of the state’s poorer communities, yet in the years that followed although unemployment went down, the number of people living in poverty increased and the median household income dropped.

A recent investigation by the Atlantic reviewed internal injury records at 23 Amazon fulfilment centres, and found that the rate of serious injuries was more than double the US national average. Amazon is the second largest private employer in America (after Walmart), and though the company is now valued at around $800 billion, its employment practices often test the limits of minimum wages and standards.

Staff working on the factory floor at Amazon fulfilment centres are relentlessly monitored using real-time metrics to ensure efficiency. Work can be back-breaking and deadlines brutal. Factory workers in the UK were found to be urinating in bottles rather than visit the toilet during their shifts. Amazon Flex, a program where people use their own cars to deliver packages, is a prime example of how regular employment (with attendant benefits) has transitioned across to the gig economy, where you do as much work as you can in as short a time as possible, and good luck if anything gets in the way. Got a ticket speeding to the delivery address? Bad luck, you pay it. Had an accident on the road? That’s your problem. Car broken down? Looks like you’re not working today.

Factory staff are instructed on how to send secret feedback to other staff’s bosses. Turnover is high, with annual cullings portrayed as ‘purposeful Darwinism’. Employees have said seeing other staff in tears is a commonplace occurrence. In a company owned by the richest human alive, it’s all rather dystopian.

Amazon’s tax practices and employment record have come under an unusual level of scrutiny during the Trump administration, in a way not unrelated to the fact that Amazon’s owner Jeff Bezos is also the owner of the Washington Post, a lead critic of the president. Trump is not the only one finding fault with Amazon’s business model. With every passing year, more people are questioning whether the benefits to the consumer offered by Amazon’s service are enough of a net gain to society to be justified.

Amazon brings jobs, but they’re often extremely demanding, low paying jobs, with a higher than average risk of workplace injury. Amazon offers the consumer a dizzying array of choice, but every item sold is an item still on the shelf at your local retailer, and that nice delivery driver at your front gate is often struggling desperately to make ends meet, despite working just as hard as anyone else. In Ohio, one in ten Amazon employees is on food stamps.

The American writer Anand Giridharadas has said that ‘our globalized, automated economy is full of magic – everyday low prices and next-day delivery on that single Gatorade you one-clicked. But it is also full of loss – of jobs, of the dignity of steady work, of chances to rise’. More and more it feels like although this new service technology can feel good for you and me, it’s very bad for ‘us’.

You’re not a luddite for lamenting the demise of a local bookshop or hardware store, nor is the closure of countless small businesses just an inevitable price of progress. The local bookshop didn’t try to put the other nearby store out of business by undercutting it. The local bookshop didn’t work its staff to the bone, forcing them to piss into jars rather than take toilet breaks. Above all else, your local bookshop paid tax.

Its easy to judge the success of the richest man in the world, who earns a million dollars every nine minutes, but the long-term benefit to a new market like WA from the arrival of Amazon remains very much to be seen.

WA’s moribund economy is already there in the empty shops at the shopping centres. It’s there in the meth consumed by the weak and the lost. It’s evident in the unprecedented homeless situation in Perth’s CBD. Amazon’s arrival is unlikely to help, and seems certain to speed the process of the long, slow death of local retail in our friendly, remote country town.