Jerry Johnson lost his last retail job about eight years ago, when the consumer-electronics chain Circuit City shut its stores under pressure from competing retailers.
On Aug. 2, he was among hundreds applying for a job at Amazon.com Inc., the new colossus of retail.
His experience told him to wear a suit, which he paired with a subtle plaid tie. He waited for his turn to take a tour of the warehouse in Fall River, and hoped he would find a job offer at the end.
He wants a career, he said, not just a job. And Amazon isn’t just any retailer.
“For me, it’s about reputation. It’s a billion-dollar company,” said the New Hampshire resident. “As far as I’m concerned, if you get your foot in the door and you work hard, this is something that can lead to a fulfilling career.”
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HIRING: Pictured above is the entrance to the Amazon fulfillment center on Innovation Way in Fall River that opened late last year. The center already employs about 1,500. During a job fair held at the center in August, the company expected to hire 700 employees for positions throughout Massachusetts. / PBN PHOTO/MICHAEL SALERNO[/caption]
According to retail analysts at Needham and Co. LLC, Amazon posted $128.5 billion in gross merchandise sales in 2016, 34 percent of all U.S. online sales. It accounted for 58 percent of all e-commerce growth in the country that year. It now accounts for one-third of all online purchases and will reach 50 percent within the next five years, Needham said in an April report.
That aggressive growth is driven by factors that include Amazon Prime, the $99 annual service that provides customers with free, two-day shipping for Amazon purchases.
Another factor is the increase in revenue from sellers who use the Amazon platform. The latter grew by 43 percent in fiscal 2016, the analysis found.
As a state, Rhode Island has participated in this revolution largely through consumer consumption.
Amazon has not located any of its 217 U.S.-based facilities in the Ocean State. And only recently has Rhode Island required sales tax remittances from online retailers, including Amazon.
But that doesn’t mean the movement of retail purchases online, and to Amazon, isn’t having an impact on local retailers.
Several acknowledge Amazon has influenced their choices in what to promote and how to distinguish themselves, even if they aren’t in a category, such as electronics or appliances, that has moved online with greater speed.
And in late August, when the Seattle-based company announced it would locate a second headquarters in North America, Rhode Island immediately entered the fray. The state is prepared to make a strong case for the Ocean State as a contender, according to the office of Gov. Gina M. Raimondo.
Some media outlets have speculated Providence could be a contender. The New York Times cited the city as a possibility, but suggested it would not have the transportation network or density of young talent needed by the company.
The online site Axios took a stronger stance in prognosticating for Providence. Co-founder Mike Allen said Raimondo would fight for it and Amazon could become synonymous with the city in a way it couldn’t with larger cities.
That’s the potential upside on the local economy of Amazon’s dramatic growth.
But Rhode Island has already seen the downside, and for some retailers it’s scary.
On Sept. 8, the family-owned Benny’s stores announced that after 93 years in business it would be closing all 31 stores in the region by the end of the year. The owners cited the threat of online retailers such as Amazon in making the decision, leaving an estimated 400 Rhode Islanders looking for work.
In a sign of Amazon’s looming presence, soon after the news, an online petition at change.org that recommends it buy the local retailer began gathering thousands of signatures, though Benny’s owners had already said they had explored selling.
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APPLICANTS: In early August, hopeful applicants for jobs at Amazon leave a staging area for a group tour of the distribution center in Fall River. More than 700 positions in Fall River and other Massachusetts locations were expected to be filled. / PBN PHOTO/RUPERT WHITELEY[/caption]
LOCAL JOBS
Amazon late last year opened one of its massive distribution warehouses, which it calls fulfillment centers, in Fall River. Already the center employs about 1,500 people. At least a portion of those workers come from Rhode Island, and many of the applicants at a recent job fair had crossed the state line, seeking better benefits if not pay.
Some of the Amazon job aspirants said they either work in, or had recently held, a retail sales or distribution job.
James Carnahan of Lincoln, who said he was unemployed, had worked for five years in the retail industry in California last decade, for a department chain that was later acquired by another chain. His most recent job was as an EMT, which ended in December.
In Fall River, he was hoping simply for a job. “I hope my expectations aren’t too high,” he said. “If I get a job here, and the benefits are better than my wife’s, guess whose benefits we take?”
His wife had spotted the ad for the jobs fair in the local paper. Based on an advertisement published the week of the event, Amazon in Fall River offered wages of $12.75 to $13.75 an hour for the warehouse positions. By late August another advertisement indicated the starting ranges had increased, to $13.05 to $14.05 an hour.
For many of the people interested in jobs, it was the benefits that would come with working for such a large company that attracted them.
They include health care beginning immediately for full-time workers, and for part-time workers after 20 hours a week. Overtime and bonuses also were in the offing, something many private employers have eliminated.
Diane Potter, an Amazon employee selected by the company to speak to reporters, was one of the first hired at the fulfillment center. She started Sept. 19, 2016, as a “stower,” a position on the receiving end of the fulfillment center that requires her to take items being offloaded from tractor-trailer trucks, and move them to the appropriate locations, where they’ll be selected for orders.
She drives a forklift. “I was petrified at first. Now I’m loving it,” she said. The work gives her a window into what people are buying. Asked what she sees most often, she responded quickly: “Dog food and diapers.”
Her schedule is four days a week, for 10-hour workdays. Her husband works in the facility, too, she said, on a different shift that allows them to coordinate care for their children. Two of her cousins have since found work at Amazon, on her recommendation, said Potter, who lives in Johnston.
The benefits at Amazon, she said, are a big attraction. The list provided to applicants included the following: employer-paid disability insurance, employer-paid life insurance, pet-care assistance, 401(k) with a company match, health care coverage, beginning with employment. Potter said she loves the job. “It brings out the best in me.”
The job fair that attracted Johnson, Carnahan and others to Fall River was one of 10 held across the country that same day. The company said it hoped to hire 700 people for positions in Massachusetts. In addition to the fulfillment center in Fall River, Amazon operates a robotics facility in North Reading, Mass.
Cedric Ross, an Amazon spokesman, did not identify the specific pay range for positions in Fall River. “Wages are competitive,” he said. “On average, Amazon employees earn 30 percent more than an employee who works in a retail store.”
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A FULFILLING FOOTPRINT: Amazon's new Fall River facility is as large as 28 football fields, and employs about 1,500 people. / PBN PHOTO/MICHAEL SALERNO[/caption]
BIG FOOTPRINT
The 1.3 million-square-foot fulfillment center resembles an automobile plant in scale, visible from a highway exit through the trees. It is the equivalent of 28 football fields in size, a company spokesman said.
Inside, past the secure entrance, floor tape in a vivid green lays out a path where pedestrians can safely walk. It’s called the “Green Mile” because if one were to follow the path, yes, it would stretch a mile.
Along broad corridors, the Amazon forklifts move swiftly, hauling containers of unboxed goods. Employees, each assigned a specific task, are engaged in work, not the typical background chatter of a workspace. In one workstation, employees wearing shirts labeled “BOD Squad” were building “boxes on demand” for oddly shaped items.
The only sound in the building was the hum of three conveyor belts, carrying boxed, stamped packages out to trucks for delivery, and the beeping of safety horns from forklifts.
On the second floor, the area designated for disassembled, boxed bicycles, identified by a sign “Bike Land,” had more than 250 boxes waiting for shipment.
Beyond the size of the facility, its 24/7 operation is an indication of Amazon’s market share. The facility has three shifts.
When this is the competition, offering two-day, free delivery of most consumer items, what are traditional retailers to do?
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BOXES ON DEMAND: Holly Manchester operates the box-on-demand station, where shipping boxes for odd-shaped items are produced as needed, at Amazon’s new fulfillment center in Fall River. / PBN PHOTO/MICHAEL SALERNO[/caption]
TRYING TO COMPETE
Several business owners interviewed by Providence Business News said they already have adapted to online competitors, including Amazon, and are finding ways to distinguish what they can offer customers.
Robin Dionne, who directs client relations for the Arcade Providence, said by design the center reached out to small- and independent business owners when leasing its commercial spaces. The nation’s first interior mall is fully leased, as it has largely been since reopening after extensive renovations in January 2014.
Programming within the Arcade, including a holiday event and a recurring farmers market, keeps people coming back, she said, as does the following of each store.
“We didn’t say yes to any chains on purpose,” she said, of the leasing philosophy. “We really wanted a small-business focus, a Rhode Island focus, a nearby Massachusetts focus. We looked for things that were unique.”
She offered the example of Nude, a boutique that was among the first tenants and remains today. “It is locally made clothing that’s surprisingly affordable,” Dionne said. “You can’t go on Amazon and get a dress and then have it tailored by the person who made it. The quality is here and it’s different.”
Amazon has increased her focus on making sure the Arcade offers an experience, as much as consumer goods, that will keep people coming back. “I have become even more aware of how important small business is, now that Amazon has made everything, literally, right at your fingertips,” she said.
Recreational goods are among those items, now purchased almost on impulse.
That’s changed the way many independent bicycle shops, and a common-supply company, operate in the age of Amazon.
About three months ago, Dash Bicycle Shop in Providence sought out a partnership with Amazon for bicycle assembly. If you, as an Amazon customer, purchase a bike through Amazon in the Providence area, a pop-up box near the end of the check-out process will ask if you want the bicycle assembled at Dash, explained owner Leo LaBelle.
If he can get a customer in the shop, he may be able to sell additional items, or earn a future customer for a bike purchase. He’s had a handful of people come in so far, via the Amazon link.
On the bicycles themselves, he really doesn’t compete head to head with Amazon. His bicycles, including the Bianchi line, start in the mid-$300s. On Amazon, an adult with an interest in a bike can get one for less than $150.
What distinguishes Dash, and other independent bike stores, is service, their understanding of how bicycles work and components that add to the riding experience.
All of that can build a customer base that returns.
And LaBelle pointed out that some of his suppliers, including Quality Bicycle Parts, have partnered with manufacturers to prevent Amazon from undercutting the independent stores selling the same items. The suppliers essentially work with the manufacturers to set ranges that the items can be purchased for, whether online or in stores.
It’s helped on sales of items, such as Kryptonite locks, LaBelle said. “If Amazon is playing by the rules, on the handful of things in my stores, I know I’m not getting burned on them,” LaBelle said.
‘We’re able to differentiate the experience. That’s our focus today.’
THOMAS WILDER, Wilder Co. principal
Thomas Wilder, a principal of the Wilder Co., which owns and operates Garden City Center in Cranston, said the company differentiates itself from traditional malls by offering more experiential and social opportunities.
It has continued to grow over the past several years, despite the acceleration of e-commerce.
“At Garden City, we’ve embraced the open-air concept,” Wilder said. “It’s not a mall experience. It’s well-landscaped. We have outdoor cafes and music series. We’re able to differentiate the experience. That’s our focus today, that it’s not just about commerce anymore. It’s not just about the transaction.”
LL Bean, one of the newer retail stores to enter Garden City, is another retailer that has site-based activities, including classes. The retailer wants a space that allows co-tenancy, but also opportunities to reinforce its brand, Wilder said.
“We gave them their own building, with a giant boot next to it, their opportunity to express their brand, in that setting,” Wilder said.
Who is having a harder time competing? That’s easy, said Paul DeRoche, who leads the Rhode Island Retail Federation. An April report by Credit Suisse predicted more than 8,000 brick-and-mortar retail stores in the United States could close by the end of the year.
“People are not going to the malls anymore,” he said. “So, it’s the malls that face the bleakest future.” A spokesman for Providence Place mall did not immediately return calls seeking comment.
National retail chains are caught in the headwinds. Across the country, department stores such as Macy’s and J.C. Penney have shuttered stores. In September, the last Sears department store in Rhode Island shut its doors, at the Rhode Island Mall.
“That shows you the retail bubble is bursting,” DeRoche said.
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GRAND SCALE: Amazon’s new fulfillment center, on Innovation Way in Fall River, consists of 1.3 million square feet of space, the equivalent of 28 football fields. The center has two floors and operates 24 hours a day, seven days a week. / PBN PHOTO/MICHAEL SALERNO[/caption]
Analysts see the next opportunity and challenge for Amazon in fresh-food sales. Its purchase of the Whole Foods chain for $13.7 billion in August was seen by retail analysts as a move to expand its distribution of perishables with a foothold in desirable, brick-and-mortar locations. Amazon immediately cut prices and attracted up to 25 percent more customers in the week following the transaction, according to Bloomberg News.
In Rhode Island, all online retailers are now required to collect the state’s 7 percent sales tax from local consumers.
Introduced as part of Raimondo’s fiscal 2018 budget proposal, the requirement was an attempt to level the retail playing field. “These are mostly e-commerce companies that have been undercutting local brick-and-mortar stores by avoiding sales taxes,” explained the executive summary to her budget.
Amazon voluntarily started paying the R.I. state tax in February.
But there is really no level playing field for Amazon, and eventually other large, internet-based retailers, according to Edward M. Mazze, distinguished professor of business administration at the University of Rhode Island. Consumers find so many advantages in online ordering that they will pay the state sales tax.
Realistically, Amazon now is impacting every small business in Rhode Island, he said.
“From the retailers’ point of view, it presents a kind of competition that small businesses can’t afford, quite frankly,” Mazze said.
