Posted on 03/11/2014 12:24:53 AM PDT by 2ndDivisionVet
If the U.S. economy is getting better, then why are major retail chains closing thousands of stores? If we truly are in an "economic recovery", then why do sales figures continue to go down for large retailers all over the country? Without a doubt, the rise of Internet retailing giants such as Amazon.com have had a huge impact. Today, there are millions of Americans that actually prefer to shop online. Personally, when I published my novel I made it solely available on Amazon. But Internet shopping alone does not account for the great retail apocalypse that we are witnessing. In fact, some retail experts estimate that the Internet has accounted for only about 20 percent of the decline that we are seeing. Most of the rest of it can be accounted for by the slow, steady death of the middle class U.S. consumer. Median household income has declined for five years in a row, but all of our bills just keep going up. That means that the amount of disposable income that average Americans have continues to shrink, and that is really bad news for retailers.
And sadly, this is just the beginning. Retail experts are projecting that the pace of store closings will actually accelerate over the course of the next decade.
So as you read this list below, please take note that things will soon get even worse.
The following are 20 facts about the great U.S. retail apocalypse that will blow your mind...
#1 As you read this article, approximately a billion square feet of retail space is sitting vacant in the United States.
#2 Last week, Radio Shack announced that it was going to close more than a thousand stores.
#3 Last week, Staples announced that it was going to close 225 stores.
#4 Same-store sales at Office Depot have declined for 13 quarters in a row.
#5 J.C. Penney has been dying for years, and it recently announced plans to close 33 more stores.
#6 J.C. Penney lost 586 million dollars during the second quarter of 2013 alone.
#7 Sears has closed about 300 stores since 2010, and CNN is reporting that Sears is "expected to shutter another 500 Sears and Kmart locations soon".
#8 Overall, sales numbers have declined at Sears for 27 quarters in a row.
#9 Target has announced that it is going to eliminate 475 jobs and not fill 700 positions that are currently empty.
#10 It is being projected that Aéropostale will close about 175 stores over the next couple of years.
#11 Macy's has announced that it is going to be closing five stores and eliminating 2,500 jobs.
#12 The Children’s Place has announced that it will be closing down 125 of its "weakest" stores by 2016.
#13 Best Buy recently shut down about 50 stores up in Canada.
#14 Video rental giant Blockbuster has completely shut down all of their stores.
#15 It is being projected that sales at U.S. supermarkets will decline by 1.7 percent this year even as the overall population continues to grow.
#16 McDonald's has reported that sales at established U.S. locations were down 3.3 percent in January.
#17 A home appliance chain known as "American TV" in the Midwest is going to be shutting down all 11 stores.
#18 Even Wal-Mart is struggling right now. Just check out what one very prominent Wal-Mart executive recently admitted...
David Cheesewright, CEO of Walmart International was speaking at the same presentation, and he pointed out that Walmart would try to protect its market share in the US – where the company had just issued an earnings warning. But most of the growth would have to come from its units outside the US. I mean, via these share buybacks?
Alas, outside the US too, economies were limping along at best, and consumers were struggling and the operating environment was tough. "We're seeing economies under stress pretty much everywhere we operate," Cheesewright admitted.
#19 In a recent CNBC article entitled "Time to close Wal-Mart stores? Analysts think so", it was recommended that Wal-Mart should close approximately 100 "underperforming" supercenters in rural locations across America.
#20 Retail consultant Howard Davidowitz is projecting that up to half of all shopping malls in America may shut down within the next 15 to 20 years...
Within 15 to 20 years, retail consultant Howard Davidowitz expects as many as half of America's shopping malls to fail. He predicts that only upscale shopping centers with anchors like Saks Fifth Avenue and Neiman Marcus will survive.
So is there any hope that things will turn around?
Well, if the U.S. economy started producing large numbers of good paying middle class jobs there would definitely be cause for optimism.
Unfortunately, that is just not happening.
On Friday, we were told that the U.S. economy added 175,000 jobs during the month of February.
That sounds pretty good until you realize that it takes almost that many jobs each month just to keep up with population growth.
And according to CNS News, the number of unemployed Americans actually grew faster than the number of employed Americans in February...
The number of unemployed individuals 16 years and over increased by 223,000 in February, according to the Bureau of Labor Statistics (BLS).
In February, there were 10,459,000 unemployed individuals age 16 and over, which was up 223,000 from January, when there were 10,236,000 unemployed individuals.
Meanwhile, the labor force participation rate continues to sit at a 35 year low, and a staggering 70 percent of all Americans not in the labor force are below the age of 55.
That is outrageous.
And things look particularly depressing when you look at the labor force participation rate for men by themselves.
In 1950, the labor force participation rate for men was sitting at about 87 percent. Today, it has dropped beneath 70 percent to a brand new all-time record low.
The truth is that there simply are not enough jobs for everyone anymore.
The chart posted below shows how the percentage of working age Americans that actually have a job has changed since the turn of the millennium. As you can see, the employment-population ratio declined precipitously during the last recession, and it has stayed below 59 percent since late 2009...
If we were going to have a "recovery", we should have had one by now.
Since there are not enough jobs, what is happening is that more highly educated workers are taking the jobs that were once occupied by less educated workers and bumping them out of the labor force entirely. The following is an excerpt from a recent Bloomberg article...
Recent college graduates are ending up in more low-wage and part-time positions as it's become harder to find education-level appropriate jobs, according to a January study by the Federal Reserve Bank of New York.
The share of Americans ages 22 to 27 with at least a bachelor's degree in jobs that don't require that level of education was 44 percent in 2012, up from 34 percent in 2001, the study found.
Due to the fact that there are not enough middle class jobs to go around, the middle class has been steadily shrinking.
In 2008, 53 percent of all Americans considered themselves to be "middle class". Today, only 44 percent of all Americans consider themselves to be "middle class".
That is a pretty significant shift in just six years, don't you think?
For much more on this, please see my previous article entitled "28 Signs That The Middle Class Is Heading Toward Extinction".
Despite what the politicians and the mainstream media are telling you, the truth is that something is fundamentally wrong with our economy.
On a gut level, most people realize this.
According to one recent survey, only 35 percent of all Americans say that they are better off financially than they were a year ago. And according to a recent NBC News/Wall Street Journal poll, only 28 percent of all Americans believe that this country is moving in the right direction.
The frightening thing is that this is about as good as things are going to get. The next great wave of the economic collapse is approaching, and when it strikes the plight of the middle class is going to get a whole lot worse.
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.
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
It’s because we have reached the saturation point on junk
Most of us have all the crap we could possibly need
that is right. Those Office Max desks are a piece of crap. Buy from the used furniture stores and get a real desk.
-——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
and consumer spending does as well:
The State will provide for all of your needs. As determined by the State.
Are those curves depicting increasing retail sales adjusted for inflation and population gain?
You are welcome to do your own data manipulations on the FRED site. Very easy to use.
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.
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?
Hmmm..... I’ll check it out
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.
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.
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.
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.
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.
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.
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.
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