The problem with retail isn't that people aren't spending, it is where the money is being spent, Jim Cramer said.
When Cramer listened to the conference call of Macy's this week, and it seemed to him that Macy's wasn't acknowledging the real elephant in the room — Amazon. Instead of recognizing that it had a real problem on its hands, it said that the problem had to do with a stronger dollar impacting tourist traffic.
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"In many ways, the decline of Macy's, as well as the pulverization of the stock of discount chain Kohl's after a terrible quarter and guidance today, is like what happened to the newspaper industry and the book store space," the "Mad Money" host said.
Both Macy's and Kohl's saw the internet coming, Cramer explained, but assumed it wouldn't impact them because they thought they were something special. Then they thought they could beat the web by joining it.
Ultimately, they were beaten by it.
Cramer recollected visiting the headquarters of Borders 10 years ago and discussing with top executives what little power Amazon had. At that time, it was just an annoying fly that needed to be swatted. They thought what mattered was the experience of going to the store.
Clearly, management didn't realize that people have limited time, and simply want to buy books and read them in the most convenient way possible.
Cramer sees the same thing happening in retail.
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"We now know that Amazon has more free cash flow than any of these department stores will ever have, and it's even funded by other retailers who need Amazon's web services to thrive online. In that sense, Amazon is the web, and retailers are like newspaper companies with websites," Cramer said.
When Cramer started TheStreet.com 20 years ago, he went from one newspaper company to another looking for funding. He would demonstrate the ability to have real-time updates and ideal delivery of information, versus the packaging and printing of a newspaper.
In that time many battled with slow dial-up internet connections and banner ads, so the idea of someone putting their credit card information on a website was crazy.
Newspapers told Cramer they were making too much money enjoying the current process.
"Needless to say, by the time they figured things out it was way too late, and all they ended up doing was creating suicidal versions of themselves online," Cramer said.
The only newspaper companies that could survive were those with proprietary content that people wanted to pay extra for. News became something people could get for free online, which hurt the industry.
Department stores are now in the same position, Cramer said.
Cramer hopes Macy's can turn out to be the equivalent of The New York Times, where people are willing to pay for content.
However, if Macy's thinks the problem with retail is the lack of newness, excitement of selection, a slowing consumer or a strong dollar — it won't be able to return to the glory days.
"The problem is the web, especially Amazon, and until they face up to that fact, they are going to be in trouble for a very long time," Cramer said.