The day that retail changed forever

FAO SchwartzSomething weird happened on an otherwise ordinary Wednesday in July in New York City. A switch flicked. A baton was passed. A change happened.

On July 15, 2015, a bricks and mortar retail icon closed its doors, while at the same time an e-commerce powerhouse had one of its biggest days ever. To me, this marked a significant moment in the shift in power from offline to online.

Let me explain. July 15 was the final day of trading for the FAO Schwartz toy emporium on Fifth Avenue in New York. This was the store where Tom Hanks danced on a giant floor-mounted piano in the movie Big. It was the place where generations of New Yorkers and tourists alike overloaded on candy and the latest toys.

I visited FAO Schwartz on its final day and, tellingly, the big promotion in the window was Jurassic World. The ‘dinosaur’ could no longer survive – closing due to the escalating costs of running a 4200sqm physical retail store on one of the priciest strips of real estate in the world.

Meanwhile, July 15 was also when Amazon ran its members-only Prime Day sale. Amazon Prime is the US$99 (A$135) a year program that provides subscribers with free two-day shipping, as well as some other included goodies, such as streaming music and movies. Wildly successful, 20 per cent of all US households are Prime members, according toBrandAsset Valuator Shopper research* run this year.

Advertised as having “more deals than Black Friday”, Prime Day generated over A$2 billion in revenue (according to a report in the New York Times), versus A$343 million on a typical day at this time of the year. Besides the A$1.66 billion sales uptick, Prime Day attracted even more new members. “It surpassed all our expectations,” Amazon CFO Brian Olsavsky was quoted as saying in the Seattle Times. “It was Christmas in July, quite frankly.”

Screen Shot 2015-07-28 at 1.44.58 pm

Admittedly, there was a negative side to Prime Day. One of the biggest trending tags on Twitter that day was #PrimeFail, as disappointed shoppers missed out on bargains that sold out quickly.

Nevertheless, it was a big enough deal to make traditional retailers follow in Amazon’s footsteps. Walmart launched its own online sales event in response, as did Best Buy.

Post July 15, I keep seeing signs that a critical shift is occurring. On July 23, a Cowen & Company report stated that by 2017 Amazon will overtake Macy’s in apparel sales. And on July 24, CNBC reported that Amazon’s market cap exceeded Walmart, the largest company by revenue on earth. And Amazon CEO Jeff Bezos’ personal value rose nearly A$11 billion, making him one of the richest 200 people on the planet.

So, this is epoch-making. It’s not the end of traditional retail – I’m a big supporter of bricks and mortar, and even Amazon is tinkering with physical stores. But it is a loud and clear warning that the old guard needs to not only continue retail reinvention, but also pick up the pace.

*BrandAsset Valuator is a study run by Y&R, the parent company of Labstore, which Jon Bird leads.

Jon Bird is MD of Labstore Global, Y&R’s worldwide retail and shopper marketing network. Twitter: @thetweetailer. Blog:



  1. Stuart Bennie posted on July 29, 2015

    Dear Jon, Extremely interesting. Well written. Cheers, Stuart

  2. Peter posted on July 29, 2015

    Great article and kind of sad as well.

  3. Brett Stevenson posted on July 29, 2015

    What is fascinating and perhaps more epoch making is that Amazon, despite its massive revenue, is yet to consistently turn a profit. Meanwhile its value just climbs. If this had happened to any bricks and mortar store they would be out of the game ( as many famous ones now are). Go figure!!

    • Paul Gibson posted on July 30, 2015

      So neither of them is making money. The online store gets all the hype, discounts away their profit and makes no money. It's hard to compete against someone prepared to do that - especially with the overheads the brick n morter stores have.

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