What's going on?

Macy�s, the huge US department store chain, reported another set of poor results and the stock dropped 15% to hit its lowest level in 4.5 years. And everyone is blaming millennials!

What does this mean?

Very simply, fewer people are shopping in department stores � and that�s largely down to a change in the shopping patterns of young people. When we want something fresh, we go to Zara or another �fast fashion� outlet that brings in a new style every few weeks. When we want something standard, we buy it off of Amazon. And when we want something really cheap, we head to a discounter like TJ Maxx (known as TK Maxx in Europe). While that is, of course, a big generalization, it is a decent summary of what�s squeezing out big, traditional retailers (in Europe and the US).

Why should I care?

For stocks: The news hurt other retailers too. Macy�s slashed its expectations for total profit this year. Investors took that as a negative sign for the whole sector and companies like Nordstrom and Kohl�s (which both report earnings on Thursday) saw their stocks sell off about 6%. The real problem appears to be that e-commerce is growing while �traditional� retail isn�t – and Amazon accounts for about 50% of e-commerce growth in the US.

For you personally: You win, businesses lose. Lots of things are getting cheaper – and that�s often due to technology. E-commerce players can offer very competitive prices because they don�t need to pay for physical shops. Similarly, entertainment is also going down in price (i.e. streaming is cheaper than traditional cable TV). It�s no coincidence that both Macy�s and Disney�s stock prices are suffering – their pricing power is getting depleted. And you�re benefitting!