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.
Correct. Retail should actually be the slowest to recover? People who have been out of work for years will know they can’t buy the crap at the mall until they pay off some of that debt. Indeed might have a job listing report.
I would think retail crashing because how PC stores have become. Look at Target. Look at any of them.
Three main reasons I won’t go to malls:
Yutes - loud, rude, disruptive
Store personnel - rude, disinterested and hard to find at times
Price missing - where is the dern price on this thing?
I knew all kinds of people like that .... in 1965.
Because we don't attempt to save money by using entitled Millennials to deliver indifferent customer service. Of course people will prefer online shopping to that. :)
If I remember correctly, it took about 2 years before Reagan's tax cut got the economy moving.
Unfortunately, things take a little time. If Trump gets his tax cuts passed, I imagine the economy will be roaring by late 2018.
Thanks to public schools; we now have several generations of adults in the workplace who don’t know how to wipe themselves properly...I do not want to interface with these people...IF I shop; it’s online.
If I remember correctly, it took about 2 years before Reagan’s tax cut got the economy moving.
...
Volcker, the Fed chairman, caused a very bad recession in Reagan’s first term.
Gee, no mention of the role the increase in various minimum wages plays.
Go figure.
Brick and mortar retail is dying. Nobody wants to navigate traffic clogged roads in surburbia jockeying for parking spaces only to have a miserable experience inside a mall or a big box store. As the army of delivery trucks in my neighborhood attest, everything is going online. I even get food, clothes and lawn mower parts delivered to me now. All the former impediments to shopping online are being rapidly removed. Mobile apps make it easy and fast. Same day delivery is the next big thing and eventually we will have ability to have 99 percent of anything we want delivered same day. It’s coming.
“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.”
So he is one of the people that destroyed Sears through a poor understanding of the trajectory of retail? Now he is a soothsayer? Sears, “We had it all and blew it!”
Same here, when clothing stores sell for the under 30 skinny as a rail over 5’8” no boob women, they lost this 5’ 130 lb, 40 D, size 12, shoes went to 7’s, I wear 5.5 some 4.5. Which they say don’t exist, BS. Go to Vegas plenty of them there. Nor do I wear at 68 Street Walker ethnic crap. I buy my bras from a specialty shop, can’t get them to fit from a mall store.
I do wear church clothes, nice jeans and T’s and Clark mules I get off Amazon as they come in size 5 there. I’ve set foot in the mall 3 times in 3 yrs. Last one to look for a nice baby shower present for my coming 7th grand daughter. Over whelmed my hearing aids.
With 6 grands and 5 great grands I buy gift cards, soon to be 7 grands and 6 great grands
I boycott Macy’s, Targets, TJ Maxx, Marshall’s and many others. Any place that has up a NO GUN sign or allows men in my bathroom. They closed my fabric store, about to close Hobby Lobby too. So why drive a 2 hr round trip plus shopping time? Salvation Army provides my Jeans, T’s come from the Military base from the mark down rack, usually.
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