Amazon was opening a warehouse every 24 hours…but not now

Amazon was building warehouses at a rapid pace during COVID-19:

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When homebound shoppers stampeded online during the pandemic, Amazon responded by doubling the size of its logistics network over a two-year period, a rapid buildout that exceeded that of rivals and partners like Walmart Inc., United Parcel Service Inc. and FedEx Corp. For a time, Amazon was opening a new warehouse somewhere in the U.S. roughly every 24 hours. Jassy told Bloomberg in June that the company had decided in early 2021 to build toward the high end of its forecasts for shopper demand, erring on the side of having too much warehouse space rather than too little. 

But, now the opposite is happening:

MWPVL International Inc., which tracks Amazon’s real-estate footprint, estimates the company has either shuttered or killed plans to open 42 facilities totaling almost 25 million square feet of usable space. The company has delayed opening an additional 21 locations, totaling nearly 28 million square feet, according to MWPVL. The e-commerce giant also has canceled a handful of European projects, mostly in Spain, the firm said.

The scale of this is worth marking: a new warehouse every day.

Companies act in such ways given economic conditions. Yet, these are not just business decisions; they affect communities. As Amazon rapidly expanded, many communities sought out such a facility and/or offered tax breaks and incentives. This happened in the Chicago region. If Amazon contracts, this affects local decisions and revenues.

As conditions change, will communities operate differently toward Amazon or will they reassess their approach to attracting businesses, jobs, and revenues? Many communities would still probably prefer to have an Amazon facility in the long run but they may be harder to entice or the competition might be stiffer. Or, if Amazon facilities come and go, they might be inclined to look toward other firms or industries.

Robot vacuum as mapper and research tool for homes

The Roomba may also be a cartography tool to map homes:

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The company announced a $1.7 billion deal on Friday for iRobot Corp., the maker of the Roomba vacuum cleaner. And yes, Amazon will make money from selling those gadgets. But the real value resides in those robots’ ability to map your house. As ever with Amazon, it’s all about the data

The Bedford, Mass.-based company’s most recent products include a technology it calls Smart Maps, though customers can opt out of sharing the data. Amazon said in a statement that protecting customer data is “incredibly important.”

Slightly more terrifying, the maps also represent a wealth of data for marketers. The size of your house is a pretty good proxy for your wealth. A floor covered in toys means you likely have kids. A household without much furniture is a household to which you can try to sell more furniture. This is all useful intel for a company such as Amazon which, you may have noticed, is in the business of selling stuff…

Amazon would not be alone in wanting to map your home. Apple Inc. also unveiled a tool in June for the next release of iOS, its mobile operating system, that uses the laser scanner on the latest iPhones to build 3-D models that it’s dubbed “RoomPlan”.

While I can imagine the commercial potential of this mapping (beyond retailers, this can be very useful for real estate businesses as well), I am also interested in the research potential. Such mapping could reveal how residents use space, floor plans, and people and pets moving through areas. Rather than relying on people’s reports on their interior activity or direct observations of this, the Roomba can be the research “eyes.” Equip it with a camera, microphone, and other sensors and it could collect all sorts of information (all agreed to by the research participants, of course). A vacuum and research device, all in one.

From Taylorism to Fordism to Bezosism

I recently finished the book Arriving Today: From Factory to Front Door – Why Everything has Changed about How and What We Buy. One argument the author makes is that Amazon and others practice a new kind of process, dubbed Bezosism:

Much of the rest of the book after this point considers the costs of this new system for workers. Even as technology enables new options – robots working in warehouses and distribution centers – humans still play a critical role but they work in difficult circumstances.

How far can Bezosism go? Amazon facilities and similar operations from other companies are one important sphere to consider. But, what about other areas? As automation increases and demands for productivity and profit increase, where does this leave workers in all sorts of industries?

Sears in Illinois began as catalog, became a department store, and ends in a suburban shopping mall

Sears has come to the end of the retail road in Illinois at Woodfield Mall:

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The last Sears department store in Illinois, which closes Sunday in the Woodfield Mall nearly a century after the retailer opened its first store ever in the Merchandise building, looks very, very…beige right now, in its final hours. Like beige on beige. Like the color of back-to-school Toughskins in 1974, the color of your uncle’s Corolla in 1982 and the color of linoleum at the DMV in any decade.

It opened the same day that Woodfield — named for Sears executive Robert Wood and department store magnate Marshall Field — opened in 1971. It was the largest Sears then, boasting 416,000 square feet of sales floor. From the looks of it in late 2021, it’s hard to imagine anything changed in 50 years…

At its peak, Sears, once the largest retailer in the country, had 3,000 locations, so naturally this Woodfield store is far from alone. Also dead after Sunday are Sears department stores in Pasadena, California; Maui, Hawaii; and Harrisburg, Pennsylvania. Long Island recently lost its last Sears department store; Brooklyn loses its last Sears on Thanksgiving Eve.

Indeed, seeing a Sears department store still serve as the anchor for a large mall right now is like a window into just how stormy and unmoored from the 21st century the American shopping mall has become. Sears sits at the south end of Woodfield, while JC Penny is at the northern end; Macy’s and Nordstroms occupy port and starboard sides.

There is a lot that could be lamented here (and is suggested in the piece): the experiences of many shoppers and employees, the connection of Sears and Chicago, bustling shopping areas now languishing, memories of earlier eras.

I find it interesting that the last Sears department store in Illinois closes in a shopping mall. And this is not just any mall: this is Woodfield, one of the largest in the United States, center of the fast-growing edge city Schaumburg. Department stores hit their stride in central business districts in the United States where rapid urbanization helped fuel consumer activity. But, the geography of business shifted as the population shifted to the suburbs. Department stores continued but now as anchors for a full range inside shopping experience primarily accessible by car. While suburbs are still growing, shopping malls are struggling and the fate of their department stores have both contributed to this decline and been affected by it.

The Internet may have hastened the decline of department stores but I wonder how much the move to the suburbs already weakened them. Stores need shoppers and it makes sense to move department stores closer to those shoppers (and other consumption opportunities). At the same time, the department store in a mall is different than the multiple floor downtown department store. Thinking along the same lines, how different are local stores, Sears, Walmart, and Amazon over time – which is the bigger jump and which factors mattered the most for the shift?

Thinking ahead, could the experience be recreated by putting a new Amazon store in the same spot? The location and infrastructure of the current setting is hard to beat. Shopping in person is still an important experience for many people even with Internet sales.

An arboretum next to a parking lot for Amazon vehicles

The Morton Arboretum is no stranger to the juxtaposition of nature and suburban development. Founded in 1922 in Lisle, the Arboretum later adjusted to the construction and opening of the East-West Tollway (now I-88) on its edges:

1957

Construction of the East-West Tollway and widening of Illinois Route 53 changed the Arboretum landscape, resulting in new lakes, roads, and a staffed gatehouse.

In a recent popular exhibit, the Arboretum even leaned into the nearby development with one installment looming over the highway:

Note the large power lines, the evidence of two major highways nearby (I-88 and I-355), and office buildings.

Recently, I drove around the east side of the property. This land has had a number of office and warehouse properties for years. This makes sense: the properties have access to multiple highways and there are plenty of residents/workers nearby.

However, I have noticed a more recent addition to this set of land uses: there is a parking lot just for Amazon trucks and vehicles. As far as I could see, there was no building next to the lot; just many spaces for vans and trucks. Looking at Google Maps, there is indeed a parking lot there among some other development and some undeveloped land. There is an Amazon facility nearby – one of many in the Chicago region – but it is not directly connected to the parking lot so drivers would have to exit to the main road and then turn back into the Amazon facility.

It is hard to completely escape development when in the Arboretum. Traffic noise can be heard, airplanes fly overhead, and houses and other signs of suburbia are visible from different vantage points. Yet, the presence of an Amazon parking lot reminded me of what nature is in the suburbs: present but often in-between roads, homes, and other buildings that speak to the ways that humans have and continue to transform natural features to their own particular suburban goals.

What does it mean if the suburb of Naperville is the first US community to have two Amazon Fresh locations?

Signs point to a second Amazon Fresh store in Naperville and if it comes to reality, the suburb will be the only community in the country with two locations.

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All signs point to a second Amazon Fresh grocery store opening soon in Naperville.

While city officials haven’t been notified of definitive plans for the site at 1351 E. Ogden Ave., Naperville Director of Communications Linda LaCloche said Amazon Fresh recently applied for a liquor license at the location. An opening date is unknown, but the building is currently being renovated and looks similar to the city’s other Amazon Fresh location on Route 59.

Naperville would become the first city in the country with two Amazon Fresh grocery stores…

According to Amazon’s website, there are only four Amazon Fresh locations in Illinois. In addition to Naperville, there are stores in Bloomingdale, Oak Lawn and Schaumburg.

Naperville may not be the only two store location for long and being the first means something. What is so attractive about Naperville as a location? Here are a few possible reasons:

-It is a wealthy and large community: over 148,000 residents with a median household income of nearly $126,000 (both 2019 estimates). This adds up to a lot of potential customers. Naperville is known for high white-collar jobs and tech jobs. These could also provide a good customer base.

-Naperville as a community has received many accolades. It has a high quality of life, high performing schools, and a vibrant downtown. It is a high status community and companies like to associate with such communities.

-Naperville is in favor of business and growth. This dates back decades with pro-growth decisions in the postwar era, includes tax incentives for corporations, and a desire to improve the streetscape along Ogden Avenue, a major roadway.

-Naperville is outside Chicago and in the Midwest, “normal America” locations for testing new concepts and ideas.

Put this all together and Amazon finds it worthwhile to go forward with two locations in Naperville.

Amazon rediscovering department stores?

Amazon’s online empire is vast but it is also expanding its brick and mortar operations with plans to open department stores:

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What solves all of these problems—the high return rates, the cost-prohibitive last-mile freight, the logistics nightmares, the buyer frustration, and the monumental volume of consumer waste it all sends to landfills—on some level? Stores. Going to a store. In America especially, this notion was obvious for more than a century. Department stores were actually such a good idea, something that people like so much and that works so well, that the Gilded Age barons who invented them used their stores to create middle-class identity from near whole cloth and keep it going for generations.

Amazon helped kill most of those stores, but that has only created a vacuum into which more Amazon products and services are ready to be inserted. If Silicon Valley has taught us anything in the past two decades, it’s that if you have a bottomless pit of money, you can remake an industry in your image. You can acquire customers so quickly that they might not realize they don’t totally love everything you’re doing, and you can embed yourself in their lives in ways that would be tangled and inconvenient to remove, largely by snuffing out competition. Which leaves the retail industry in a precarious position: Amazon, and maybe a handful of its largest competitors, will go about deciding how you get to buy the things you need, with very little meaningful pushback. They’ll set prices, they’ll set labor conditions, and they’ll decide which things are too inefficient for you to buy online. Apparently, those things will go into a store.

Amazon and the companies like it invent the solutions to the problems they created, and you pay for them to be implemented. At least in some cases, physical stores may ultimately win out. You can try on your new pants, sit on your new couch, and leave with the thing you wanted immediately, which, it should be noted, is considerably faster than two-day delivery. Yes, you have to go to the store, but doing so will likely obviate the need for you to go to the post office—the dreaded post office—next week. Work smarter, not harder. It’s what Amazon would do.

A physical location offers certain conveniences. But, do not discount the embodied experience of shopping compared to online shopping. In a building, you can:

  1. See and possibly touch the item you want to purchase. This may matter more for some consumer goods than others.
  2. Browse and bump into things – literally. You can end up following rabbit trails online but this is different than seeing something unexpected or just look around.
  3. Be around other shoppers and enjoy the atmosphere. I wrote about this at Christmas; part of the fun is being around people and activity.
  4. Physical spaces can project status and emotions in ways that online portals cannot. The size and layout of department stores can impress and invoke particular feelings. Would you rather think about a soulless and endless Amazon warehouse or a fashionable and high-tech store?

Of course, some of these things can go awry. The item might not be in stock, you do not find what you are looking for, you have negative experiences with other patrons, and the experience is off-putting rather than exciting. But, Amazon might be at the point where they can offer compelling experiences in both realms in ways that others could not.

The spatial impacts of Amazon

A review of a new book about Amazon highlights the geographic impact of the influential company:

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In some of MacGillis’s stories, the connection to Amazon is so tenuous as to be almost indiscernible; the characters’ problems seem to arise more from larger forces, such as globalization, gentrification, and the opioid crisis, than from any one corporation’s influence. A young man from small-town Ohio—alienated by his experience in D.C., where he starts college—returns home and enters Democratic politics. After scoring a local success, he runs for Congress, determined that the party not write off his opioid-ravaged, Trump-supporting region, but he fails to drum up more than a couple of union endorsements. A gospel singer who became a cultural force in Seattle during the ’80s watches as her neighbors are pushed out of the city’s historically Black Central District one by one.

Local energies may have been sapped for many reasons, yet in the coastal cities that MacGillis visits, Amazon’s disproportionate ability to further enrich and empower already thriving places and workers is glaring. Familiar though they are, evocations of the six-figure salaries and amenities available to young Amazon programmers—a café catering to their dogs, meeting space in a giant replica of a bird’s nest—acquire new salience set against Torrez’s experience. And the sense of entitlement on display in the company’s search for a second headquarters site is breathtaking. Local officials across hard-knock America prostrate themselves for a chance to host it. In the end, Amazon chooses the suburbs of the nation’s capital—already one of the wealthiest areas in the country—and walks away having amassed a great deal of useful regional data provided by eager bidders who probably never stood a chance.

In the less glamorous pockets of the country—the rural areas and small cities where MacGillis has spent so much time as a reporter—Amazon’s role in making economic hardship more entrenched is no less stark. In El Paso, Texas, Amazon has aggressively marketed itself to the city government as a go-to source for office supplies—which has pushed local purveyors to open up online storefronts on Amazon; a large cut of their sales goes to the corporation. In York, Pennsylvania, the headquarters of the once-fashionable Bon-Ton department store has been made extinct by Amazon and the broader retail consolidation it represents. The crisis of unemployment that has ensued is one that Amazon exploits, finding able bodies for its warehouses in nearby towns.

On his home turf of Baltimore, MacGillis explores most intimately the ebbing of human fulfillment that has accompanied Amazon’s promise of high-speed customer service. He profiles Bill Bodani Jr., who spent most of his working life at Bethlehem Steel’s Sparrows Point complex, outside the city. In the early 2000s, a serious injury forced him to retire in his mid-50s, around the time that foreign competition and other factors pushed the company into bankruptcy. Eventually, the Sparrows Point plant shut down and Bodani’s monthly pension payment was cut from $3,000 to $1,600. Now 69 years old and back at work as a forklift driver in a 22-acre Amazon warehouse, he returns every day to the exact same piece of land. The peninsula has been rebranded—it’s called Tradepoint Atlantic now—and has become what MacGillis calls an “all-purpose logistics hub” that houses, among other facilities, an Amazon fulfillment center.

While Amazon is not the only major corporation that could claim to have a a large impact on so many places in the United States (think Walmart, McDonald’s, and a few others), it’s particular reach and impact might just be unique. With an ability to reach millions of customers in their homes, tech workers in a lot of locations, and fulfillment centers spread across the country, Amazon reaches across multiple sectors and job segments.

This means that its impact on particular places could be quite disparate. Take the Chicago region as an example. Like many places, Chicago wanted Amazon HQ#2. This would add to both office workers in downtown Chicago as well as many more in fulfillment centers around the region. Yet, Amazon’s locations received more money from some poorer suburbs.

Each of these Amazon locations, high-tech or not, has the potential to shape the character of communities. Consider the fate of places like Elwood, Illinois that rely on warehouses and distribution centers. Is an Amazon fulfillment center a good trade-off in the long run? Does the chase for a new headquarters or some higher-quality jobs in corporate offices encourage communities to offer tax breaks and more? What kind of local citizen is Amazon – does it participate in and contribute to local activities, do its buildings and its footprint positively contribute to civic life?

Amazon my be global but it is local for many communities. How it interacts with these numerous local contexts may help decide its long-term fate.

An on-trend Amazon HQ2

Many plans are made for large buildings in cities and metropolitan regions. Not all of them are built. But, when Amazon releases plans for their HQ2 in Arlington, Virginia, people take notice because of the company and the design.

AboutAmazon.com

The centerpiece will be the site’s fourth and tallest tower, a 350-foot structure dubbed the Helix because it will feature two spiraling outdoor walkways with trees and plants from Virginia that twist to the building’s top…

Amazon’s new campus is the latest in a growing line of outdoorsy office projects, as companies try harder to offer a pleasant work environment and appeal to eco-conscious employees.

The Helix “will be an opportunity for people to literally go on a hike in the city,” said Dale Alberda, a principal at architecture firm NBBJ, which is designing the development across the river from Washington, D.C.

Plans for inside of the building also call for plenty of greenery, along with meeting space, offices and studios for artist residency programs. “You feel like you’re in a lush garden in the middle of winter in D.C.,” Mr. Alberda said of the interior design.

As someone who teaches Urban Sociology, this is right on trend in multiple ways.

  1. It is just outside the central city of the region but within a business district. (The Washington D.C. region has some unique features due to the government buildings at the center but the multinode region is found throughout the United States.)
  2. The building has numerous green features, both visible (such as lots of trees) and invisible (planning for efficiency).
  3. The design is more whimsical and playful compared to the more common glass and steel box. The structure will certainly stand out and attract visitors just to see it.
  4. The architects and the company say it is designed with people and well-being in mind, not just efficiency or costs.

Perhaps the only trend missing is a mixed-use component where the office space is combined with residential and commercial space.

All of this is for a tech company – perhaps the tech company right now – within an industry that hundreds of American communities would love to attract. Does this building work in the same way if it is built by an insurance company or as a municipal structure?

It will also be interesting to see how this interacts with surrounding buildings – including the other planned Amazon towers – and the broader community. Amazon says the grounds will be open to the public yet how many community members will be able to take advantage.

$741 million in tax incentives for Amazon in NE Illinois – with a bigger price tag for economically challenged communities

Amazon has constructed 36 facilities in the Chicago region since 2015. And they got a lot of help from taxpayers in disadvantaged communities:

WBEZ

To help pay for its vast expansion, the company and its developers have won at least $741 million in taxpayer-funded incentives in northeast Illinois alone, according to a Better Government Association/WBEZ investigation…

Amazon collected less than $100 million in public incentives for the 15 warehouses it built in predominantly white communities but won more than $640 million in taxpayer incentives for the 21 projects built in communities with larger nonwhite populations, the examination found. Many of those communities are either mostly Black, mostly Latinx or have higher concentrations of low-income residents, and with municipal budgets already short on cash.

Records show the three largest incentive packages Amazon received — totaling $512 million — all came from predominantly Black suburbs. By contrast, the company built warehouses in at least seven mostly white communities that reported offering no public incentives at all…

While many of the communities may get more jobs, experts interviewed say the lost revenue from taxpayer incentives will strain public resources to rebuild crumbling roads from the truck traffic, mitigate pollution from the exhaust fumes and noise and to pay for other services such as police protection and fire prevention.

That big companies seek out tax breaks and local incentives is not new. Amazon played the game on a grand scale with its proposed second headquarters.

But, this illustrates one of the problems with tax breaks in general: it is a race to the bottom. Companies look for communities that will have a hard time saying no. What mayor or local official wants to turn down local jobs? Or, turn away a big company with the status like Amazon? Once they have such a company in town, communities often build on this when marketing land and facilities to other firms by saying they are home to Amazon.

Yet, the deal may not be a good one. Jobs are not the only factor that matters in a community. As the story above notes, traffic, pollution, noise, the strain on local budgets and services, and the quality of the jobs also matter. Does the addition of Amazon or another large company make the community as a whole better down the road?

The system could be improved in multiple ways. All the communities in a region could stop competing in this way; that Amazon locates within one municipality could also have spillover benefits for other communities. One community’s gain is not necessarily one community’s loss; the region operates as a whole. If revenue was shared across a region, then tax breaks in a particular community would matter less. Or, communities could just commit not to offer tax breaks at all. If companies cannot play the game, they would have to locate places for other reasons.

These possible solutions do not solve the underlying issues: jobs and capital in a metropolitan region are not evenly distributed. Patterns by race and class continue for decades as companies, residents, and other seek out particular locations and not others. That some communities have to pay more for Amazon to locate there just compounds the problem.