Posted on 05/02/2017 6:49:17 PM PDT by 2ndDivisionVet
With unemployment low and economic growth expected to bounce back from a slow first quarter, consumers are not in bad shape. But it has been an especially terrible year so far for retailers.
Nine U.S. chains have filed for Chapter 11 bankruptcy protection. Store closures are accelerating, and almost 90,000 retail workers have lost their jobs since October.
Experts say the industry's troubles are just beginning.
"The disruption is just unfolding," says Mark Cohen, a former CEO of Sears Canada who now directs retail studies at Columbia Business School. "I think the number of store closings will continue at an accelerated pace right through this year into next year."
It's not that consumers are being more cautious. Spending is up, but most of that growth is online. Traditional brick-and-mortar stores are grappling with intense transformation of their business to be more Web-based and trying to reconcile their old business model with one in which profit margins are thinner.
Cohen says retailers typically reassess their businesses after the holiday shopping numbers come in and adjust by closing or reallocating resources. For some big national chains this year, that process is resulting in a bloodbath.
The Limited, BCBG Max Azria and Radio Shack filed for bankruptcy. So far, 3,100 store locations have closed in 2017 — more than all of last year combined. J.C. Penney said it would close an additional 138 stores this year, Sears and its Kmart brand intend to close 150 stores, and Macy's will shut down 100 stores.
There are 1,200 malls in the U.S. — the most ever, according to the International Council of Shopping Centers. Experts agree there is simply too much real estate devoted to retail. Cohen says all but the best-performing malls — which make up roughly a third of those enclosed malls — will have to close or find a new identity. In fact, many are being redeveloped to include office space, apartments, gyms or smaller retail space.
"It's not clear what we're going to look like on the other side when this is all over, if it in fact is ever all over," Cohen says.
Matthew Shay, CEO of the National Retail Federation, says historically, changes in retail have happened slowly. Not so today. "The velocity of change is unlike anything we've ever seen," he says. "Before, things happened over a generation; now they're happening overnight."
Shay says retail's workforce needs are shifting, which is why the trade group launched a program offering certification to laid-off workers in January, hoping to retrain them with higher-level skills that are in demand. "They'll be in operations; they'll be in warehousing; they'll be in store management; they'll be in digital," he says.
(The Bureau of Labor Statistics says 89,000 general merchandising workers have been laid off since October, a number that excludes gas, grocery and online sales.)
Marshal Cohen (no relation to Mark Cohen), chief retail analyst for The NPD Group, says brick-and-mortar stores aren't just competing with rivals; their sales are being cannibalized by their own online operations, where profit margins are thinner.
Some retailers, like Bonobos and Warby Parker, that started online are opening stores as showrooms, places where consumers can test their products and then order online. Marshal Cohen says those types of showrooms require a lot less space than a conventional store.
Another big change, he says, is that social media have usurped the mall as the gathering place of choice. Malls are trying to counteract that by building more restaurants and movie theaters, to create places where people want to come to interact.
"We are entering an interesting phase of consumption," Marshal Cohen says. "We're not interested in buying products. What we are doing is building memories."
Some analysts believe some of those who lose their jobs at retail will be absorbed by a growing service sector, like restaurants. But one of the unions that represent some workers says that is not happening.
"That has not been our experience. That's not what we've seen," says Stuart Appelbaum, president of the Retail, Wholesale and Department Store Union.
The retail jobs of the future might be in a distribution center, but he says those jobs are typically far away from metropolitan areas where more stores are located and require different types of skills than those of, say, a cashier.
"There is a lot of stress in being a retail worker today," Appelbaum says. "You worry about e-commerce, you worry about automation, you worry about what's happening with all the retail jobs that are being lost as stores close."
Politicians speak about how to manage job dislocation in coal mining and manufacturing. Now, Appelbaum says, it's time to do the same for retail.
I myself do not believe, we are in a strong economy.
I think the economy is now what it has been for years, a shrinking mess.
Sure Trump is off to a good start, but I do not see things improving anytime quickly.
The last couple of monthly reports, have actually been worse than they had been before.
Trump is on the right track generally, but he is not championing American jobs yet, that I have seen.
My habits haven’t changed dramatically, but when they have changed it has been mostly down to stupid retailer tricks:
Everyone stocking the same Chinese tat.
Empty shelves.
Bait and switch.
Byzantine return policies and downright combative employees who act as if the refund is coming out of their own pocket.
A lack of cashiers and slow checkout.
Interminable and annoying sales pitches for warranties, credit cards, and so-called charities.
Appallingly inadequate product knowledge.
And then there are the properties, a magnet for feral fatherless punks.
Is Amazon convenient? Well stocked? Yes and yes but when I need an item the same day it would still be nice to have the local option.
From what I have seen Trump is doing all he can to create a good atmosphere for business to thrive in. He has been cutting all the job killing regulations that he can.
Thus proving that those who can't, teach.
There have been many postings here about companies returning to the U.S.from overseas for manufacturing, etc.
Just search keyword “jobs” her at Free Republic.
"Store management". WTF? The whole article is about the death of retail. They are really going to re-train people to manage the stores that went out of business? What is he smoking? What stores?
"Daddy, tell me again what a "store" is! Did you really have stores when you were a kid? What was it like? Did you REALLY have to take Uber to a building where you bought stuff?"
I appreciate the fact you post frequently about jobs which are being added.
I really do. Thanks for paying attention to American jobs, your posts are a true inspiration.
But I am talking about jobs. Real jobs. Increasing American employment.
So far, I have not seen that.
I am waiting. I am hopeful. I am not saying Trump is not doing anything about American jobs.
I am just saying, we are still waiting to see proof things have changed from the way they were.
I have not seen that yet. Not yet, that I have seen anyway.
But good jobs on the posts. :D
One million is a big number:
http://www.freerepublic.com/focus/f-bloggers/3547383/posts
So is five million:
http://www.freerepublic.com/focus/f-news/3549253/posts
My beef with a mall is finding a damn parking spot after maneuvering in god-awful traffic then trekking a half mile in the heat into the damn store.
Forget that for discretionary spending.
I liked your comment about Byzantine return rules.
Two years ago, my mother got me a pair of jeans for Christmas. I really, really didn’t like them. They were from Eddie Bauer and too trendy in design for me. So, with gift receipt in hand, I went to Eddie Bauer, the nearest store being about 40 miles away.
I looked through the store and found nothing that caught my attention as wanting to wear so I asked for a refund.
Apparently a gift receipt, printed, with an Eddie Bauer logo on it isn’t enough for a cash refund. What is is good for? who knows.
I reminded the store clerk that mall based retailers are shutting down all over and perhaps a modicum of actual customer service might be in order, especially for someone who had never darkened their doors before or since.
My wife finally found a shirt she liked after several searches of their website, getting me nothing for Christmas.
Not sure why anyone would listen to Cohen. He sucked Sears dry, never trying to innovate anything. He sold off their organs, little by little, for artificial quarterly profits. He is an undertaker. I’m all for Capitalism, but Cohen is a human leach. He’d sell his mother.
I think we’re in a really good economy, but one that is rapidly changing for the better from what EVERYONE here has whined about for years-—a consumer economy-—to what Reagan had, a production and investment economy.
If you look at post after post of expansions, jobs added, investment confidence, and so on, it’s really clear that the economy’s on the right track, but retailers, who have been (unfortunately) leading for the past 10 years are now going to have a hard time.
This is the beginning of the new supply-side revolution and it always starts with investment.
Great points. My wife shops retail stores a lot and says there is NO ONE there to help you find anything, to ask questions, and often not even to take money. Increasingly they don’t want cash, either.
Everything you mention she confirms. So, yeah, retailers will be in for a hard time till they figure this out.
I went to Sears to find something. It was between herramientas and plomeria.
I don’t think anyone, except maybe you, expected the private sector to be able to immediately go on a hiring frenzy within weeks of Trump’s inauguration. Trump has been working to create a better business environment so they can plan and expand. If the republicans can get the tax overhaul done that will help the most.
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