Retail apocalypse is still going strong.
Begining in 2016 more than 4,000 physical stores have seen devastating closures as American consumers shifted their purchasing habits. The biggest store slayer of course has been online shopping. Every innovation that has made shopping online easier and more secure has been like another horrible flesh eating virus to retail shops.
The hardest hit have been traditional retailers, whose strategy of brick and mortar stores has focused mainly on inhouse visual merchandising and customer service to drive their sales. Against the universal and silent attack by online shopping, these giant dinosaurs have taken the worst of it in the past year.
Institutional chains like J.C. Penney and Macy’s announced hundreds of store closures.
Even well-known brands like J. Crew and Ralph Lauren are unprofitable. Many of them have been losing money for a couple of years.
And the effect on commercial real estate has been equally devastating, leading to cannibalistic legal maneuvers and massive closures.
Of 1,200 shopping malls that are left in the US, 50% are expected to close by 2023.
Aside from obvious causes like online shopping (Don’t say ‘Amazon’ in a mall unless you want to see fully grown adults go pale and small children start screaming) economists claim that the historic collapse is related to the middle-class squeeze, in which consumers experience a decrease in income while costs increase for education, healthcare, and housing.
But whether its the middle class or the internet class, in the real world shopping institutions recognizeable for a hundred years are shutting down.
Sears, for decades, the nation’s largest retailer, closed more than half of its stores over the last seven years.
Sears also owns the retail chain Kmart Corporation. K-Mart has already closed more than 60% of its stores, with more closures coming.
The Atlantic calls it “The Great Retail Apocalypse of 2017,”
A partial list of the major American retailers who have been affected.
Abercrombie & Fitch Facing declining sales, the once-prominent fashion brand announced last March that it would close 60 of its U.S. stores with expiring leases during its 2017 fiscal year. The chain has closed hundreds of store locations over the last few years
American Apparel has not made a profit since 2009 and filed for chapter 11 in 2015
This is part of an unstoppable migration to online commerce, according to most sources, but in some cases the tech revolution is also leading to a virtualization of product that doesn’t require a physical store anymore, as evidenced by the disappearances of book, music, movie, and game retailers. All of these products were once only available in three dimensions, but all of them are now streamed or exist only as data. Virtualization of these products also led to the disappearance of all manner of goods. Who needs a CD rack anymore? When was the last time you needed a magazine storage rack at your house? How about a fancy bookmark from Hallmark?
The closings also have a long term effect, as there will be less and less real estate investment into the kinds of properties that feed retail sales, making their easy spread during the past thirty years increasingly difficult.
Its a brave new world, folks, especially for those businesses caught in the crosshairs of advancing technology and globally changing shopping hapits.
