20 Facts About The Great U.S. Retail Apocalypse That Will Blow Your Mind

The Economic Collapse ^ | March 9, 2014 | Michael Snyder

[Alberta's Child]

You raise a good point. A lot of what you're seeing here has very little to do with the state of the U.S. economy and is simply a function of overbuilt retail space in this country.

For one of the projects I was working on a couple of years ago, the client had an economist on the consultant team who was doing a real estate market analysis for various sectors of the economy. He presented these interesting historical statistics for the U.S. showing a ratio of retail floor space to population going all the way back to the 1940s. The number was pretty consistent up until the 1980s, then it escalated dramatically until it was something like seven times higher by the mid-2000s than it had been in the 1940s.

It was obvious to everyone in the room that the economy simply couldn't support that much total retail space even if economic conditions were strong.

[Jimmy Valentine]

Due to technogy the era of the big box store is ending overhead is critical. My prediction is that numerous small businesses primarily operating on the Internet will replace most mall stores. They will use just in time inventory and limit the range of what they sell

[2001convSVT]

And we still can't buy any ammo, especially 22’s. Why can't the ammo companies build any new factories? and hire someone to make the stuff? At the present demand rate we could put a hundred thousand people to work.

[yldstrk]

It’s because we have reached the saturation point on junk

Most of us have all the crap we could possibly need

[yldstrk]

that is right. Those Office Max desks are a piece of crap. Buy from the used furniture stores and get a real desk.

[bert]

-——why are major retail chains closing thousands of stores——

Because the stores were built as a result of unjustifiable exuberance.

A curve was drawn and projected linearly to develop a number of new stores to be built. They were built in the face of an economic head wind that made the effort unjustified. The person that made the decision would not back down and the closings lag the necessity.

Radio Shack has nothing unique to sell. Radio Shack is obsolete. JC Penny hired a fool that trashed a hundred years of retail experience. The penalty was severe.

Sears and K Mart merged to gather strength but the model is not able to withstand the competition wrought by technology the company failed to use.

Blockbuster was rendered obsolete by Netflix

Change is at the root but bad economy is not the sole culprit

Hard times are in reality somewhat hard times. Some are bothered but most are not. Life goes on at a plateaued level

[Wyatt's Torch]

Heh... Exactly. This article focuses on brick and mortar retail. Overall retail sales continues to climb:

and consumer spending does as well:

[Travis McGee]

It doesn't matter in the fundamentally transformed USSA.

The State will provide for all of your needs. As determined by the State.

[bert]

Are those curves depicting increasing retail sales adjusted for inflation and population gain?

[Wyatt's Torch]

Here it is per capita;

You are welcome to do your own data manipulations on the FRED site. Very easy to use.

[Soul of the South]

There are some significant other contributing factors to the decline of traditional retail stores:

1) The internet has been taking market share from brick and mortar stores
2) Technology change has decimated stores selling or renting music and video such as Best Buy, Circuit City (gone), Blockbuster, and Hollywood Video.
3) Aging of the population. As the baby boomers reach retirement age they are downsizing homes and liquidating possessions. The home furnishings, tools, and clothing they are selling or giving away reduces demand for retail stores.
4) The proliferation of second hand retail stores (Goodwill, Salvation Army, consignment shops, and flea markets) is taking market share from traditional discount chains.
5) Craigs List and eBay have created new ways for consumer to find second hand merchandise as well as new goods and services, bypassing traditional brick & mortar retailers.
6) The rise of dollar stores servicing low income customers and taking market share from discount stores.
7) Casual dress in the workplace has shifted clothing buying patterns.
8) Shifts in the demand for consumer products due to demographics changes and technology result in reallocation of disposable income by consumers and therefore store selection. An example is demand for cell phones which is resulting in a proliferation of retail outlets marketing mobile phones and accessories. The billions being spent on cell phones and mobile services each year by consumers represents a shift in purchasing from other products and retail stores.

The retail landscape is constantly evolving in response to demographic shifts, technology, and changing consumer tastes. In my lifetime I’ve seen the demise of the 5 and dime store (Woolworth’s, TG&Y, Kresge) offset by the creation of the dollar store concept. The local mom & pop drug store has been replaced by big chain drug/convenience stores such as Walgreens and CVS. Gasoline station franchises of the big oil companies where the attendant pumped gas for you have been replaced by chain gasoline/convenience/fast food stores such as WaWa and Sheets. Specialty store chains, such as Victoria’s Secret, Ann Taylor, Talbots, Chico’s, and Jos A Banks have replaced mom & pop local clothing stores. Local bookstores have gone away, replaced by Barnes & Noble, Borders, and Amazon. Now electronic downloading of books to Kindles, iPads, and Nooks has killed Borders and threatens Barnes & Noble as well as the local public library. The Sears, Montgomery Wards, and JC Penny catalogs were discontinued two decades ago only to be replaced by Amazon and other internet retailers who adapted technology to make mail order shopping a growth industry.

Some formerly great retail chains such as Kmart and Sears are currently dying because the Wall Street investment wizards who purchased them are stripping them of assets by not investing in store upkeep, inventory, or associates on the floor. The management failure to provide good value and service to customers is causing them to fail, not the economy.

On the flip side we see other brick and mortar retailers thriving - H&M, Zara, Apple, Trader Joe’s. History shows retailers who understand the customer, adapt to the times, and continue to innovate will prosper even in hard times.

[central_va]

So if I rented a semi trailer went to Seattle, smoked some legal weed of course, went around bought everything at yards sales and went to KY I could make a good profit and get high to boot?

[bert]

Hmmm..... I’ll check it out

[spankalib]

True that - although, I am unaware of any central-planned, marxist-y society that DIDN’T destroy the middle class.

Our slide into socialism must be stopped - or that is our inevitable fate.

A few “rich guys” in control of the gubmint enjoying the spoils,
and the rest of us toiling for bare sustenance...

Making us slaves with their smiles.

[old and tired]

I'm not denying the economy's in the crapper, but this article is a lot of hysteria. Blockbuster is closing its stores? Is that really a sign of a bad economy? Radio Shack? Many components that could only be picked up there can now be more easily purchased (with a much greater selection) on the internet. Rural Walmarts? Once again, I would think a lot of the non-food stuff can be more easily purchased on the internet for a lot of the rural population. Maybe quicker too, if folks don't plan on heading out in their Walmart's direction for a few days. Unfortunately for Staples, a lot of office supplies can be purchased much more cheaply from Costco.

I'm looking at this list of stores and I'm thinking that I haven't really shopped at most of them in more than a decade.

[relictele]

I will readily concede that no retailer can compete on price and an unlimited, if virtual, inventory at Amazon or elsewhere online.

However...many of retail’s problems are self-inflicted.

1) They worry less about the current sale and more about the next one. A once-simple checkout procedure is now a sparring match with cashiers asking for loyalty cards (irony alert), quizzing you on why you don’t have one, demanding to know your details so they can ‘look you up,’ and pressing you to obtain one.

2) If retailers want market research, then they can bloody well pay for it and conduct it themselves. Stop hounding me to ‘visit this web site and take a survey and register to win.’ I’m tired of getting receipts longer than a roll of toilet paper. You want feedback? Here’s some feedback: how about thanking me for my purchase instead? ‘Have a good one’ is not the same thing as gratitude.

3) Retailers are suffering death-by-actuary. By hyperanalyzing sales figures, they are creating a death spiral. If you stock only ‘top sellers,’ you eliminate variety. Eventually, this whittling will turn a redwood into a toothpick. Retailers will claim they are attempting to protect their profitability but the result is a boring sameness of merchandise across so-called competitors. What’s the point of shopping retail if I have no option but to wear what everyone else is wearing? Have you seen some of these people? If I can’t tell Macy’s from Dillard’s from Belk then what incentive do I have to shop at one over the other?

4) The OEMs (brands) aren’t helping. It’s clear that they are issuing tiers of product, with some going to mass retailers, some to specialty stores, some to their own ‘factory stores’ (what used to be outlets featuring bargains) etc. Anyone paying attention knows that if you’re looking for a particular model of adidas shoe, for example, you can eliminate certain retailers from the search as they stock only low-end or targeted models. And you’ll probably end up ordering from Zappos anyway due to miserly purchasing decisions by retailers. Why are retailers buying a single size run? It’s madness, especially considering the concentration of purchases in a particular size range (e.g. shoe 9-11). There’s a reason clearance sales have shoes sizes 5, 6, 7 and shirt sizes Small and Medium - nobody buys this stuff! Why are OEMs and retailers sticking to this outdated, futile approach?

I freely admit my tastes are particular and overly-considered but I remain shocked that I can walk through an entire mall without even being tempted by a product. Or perhaps it’s because I reject ‘fashion’ in favor of a shoe that isn’t as light as a bedroom slipper (and will fall apart quickly) or a shirt through which I can read a newspaper.

If we must buy clothes made in China so be it. It doesn’t mean I want to look like a bike-riding peasant in Beijing, however.

[Gaffer]

They did NOT repay premium investors whom they and the government cheated with 10 cents on the dollar extortion. They are NOT a company “doing well.” They are thieves.

[Buckeye McFrog]

Having worked in that business for a number of years, I can enlighten the author to one key relevant fact.

Retail chains are run by IDIOTS!

They construct their own pyramid scheme on borrowed money. They go out and overexpand, building stores to pump up their sales figures to lure investors who are too darned ignorant to grasp the concept of “comp store sales”.

All based on incredibly rosy projections of absolutely EVERYTHING breaking right. Which it rarely does. So the pyramid collapses in a blizzard of bad debt. But the senior execs drag it out until they can manage an escape with their golden parachutes.

[3Fingas]

The economy has been in a near depression since 2008 and the middle class is shrinking/dying for nearly 40 years. There are a lot of reasons for this economic decline. The retail world is very volatile and the Internet is causing many traditional stores to close their doors. But even in these terrible economic times, there are people who land on their feet. Workers with the right skills and willingness or ability to move are in great demand in the following fields: Oil /Natural gas fracking, IT/software development, Gun/ammo manufacturing, prepping/sufficiency movement. I have several friends all in IT have received numerous job offers, many in the low 6 figures. These fellows have degrees and Computer Engineering, Computer Science, and Math. if you have a degree in some useless major your options are more limited.

[redgolum]

We are in a depression. I don't believe it will ever be called that, but we are there.

The jobs are gone, never to come back till wages drop below those in China. The problem isn't just the regulations, or unions, but the fact that it costs so much less to employ someone in a third world country than in the US.

In short, the middle class will be gone before the recovery.

The only caveat is that there may be a major war. Many economist point to the post war booms as a sign that we need to have a good blow out to do two things.
1. Kill off a few million people (reduce labor supply).
2. Defer demand for consumer goods (post war ration boom when everyone tries to catch up).

The trouble is that the only reason we had the 50’s like they were in this country is we had killed and destroyed our competitors ability to produce. The US was the only major manufacturing power that wasn't bombed, invaded, or starved out.

It won't be that case next time.