These are tough times for the retail industry.
You can find plenty of evidence of this at your nearest mall or retail “power center.” Chances are you’ll see at least one vacant shell where a familiar retailer used to operate.
A recent article by Derek Thompson in The Atlantic reports there have been nine major retail bankruptcies so far in 2017 — as many as we experienced in all of 2016.
Sports Authority and Sport Chalet have struck out and are out of the game. Payless ShoeSource is down on its heels with a Chapter 11 bankruptcy. RadioShack is sending out an SOS after closing more than a hundred stores.
Stock prices are tanking at such apparel mainstays as Lululemon, Urban Outfitters and American Eagle, and Sears and Macy’s are following a similar path with massive store closures of their own.
What’s going on? We can’t blame the overall economy, which has been growing steadily for eight years. Unemployment is shrinking, wages are inching up and low gas prices are expanding the spending power of Americans.
Thompson cites the following trends that are contributing to an “extinction-level event” in the industry:
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- Internet commerce: Amazon and beyond.The retail industry is being conquered by the Amazon empire. Jeff Bezos’ company is growing at an incredible rate, with sales volume quintupling between 2010 and 2016. Half of America’s households now subscribe to Amazon Prime!
As new apps and online startups are making it easier than ever to shop and purchase goods through one’s smartphone, brick-and-mortar retailers are forced to match the prices of their Internet competitors while still paying high rents.
- We have too many malls already.While there will always be stores, the new realities are destroying the economic models that created the shopping mall as we know it.
The number of malls in the U.S. grew more than twice as fast as the population between 1970 and 2015, a pace that was unsustainable. Mall visits declined 50 percent between 2010 and 2013, according to the real-estate research firm Cushman and Wakefield, as club stores and online commerce continue to squeeze anchor tenants like Macy’s and Sears.
- Americans are becoming more social and less materialistic.Consumers are spending less on designer-label clothes and spending their dollars instead on “experiences” such as restaurants and travel.
Last year, U.S. airlines set a record with 823 million passengers. Also in 2016, Americans spent more money in restaurants and bars than at grocery stores.
- Internet commerce: Amazon and beyond.The retail industry is being conquered by the Amazon empire. Jeff Bezos’ company is growing at an incredible rate, with sales volume quintupling between 2010 and 2016. Half of America’s households now subscribe to Amazon Prime!
Thompson concludes his analysis with a prediction that “self-driving cars could change retail as much as smartphones.”
Imagine a retailer sending thousands of autonomous minivans roaming the streets of our cities, each one ready to deliver a mini-show room full of goods to our doors whenever we have the urge to look at it.
“The future of retail could be even weirder yet,” Thompson writes.
No matter what happens, I can predict this: UFCW Local 99 will be ready to stand up for workers in the retail sector and all of the industries we serve.
