During the past eight years, the U.S. economy has emerged from a recession with steady, if not robust, growth and a decline in unemployment. Those trends, though, belie the fate of an increasing number of troubled retailers.
Nearly 3,000 stores nationwide currently are slated to close this year. Nine prominent retailers already have declared bankruptcy in 2017, matching the total a year ago.
Sears and its sister Kmart will close more than 150 stores (Sears remains open in Waterloo, but Kmart has closed); J.C. Penney, 138; and Macy’s, 100. That will leave many malls without major anchors. The decrease in foot traffic will affect smaller tenants. A Credit Suisse analysis predicts 200 shopping malls are at risk with continuing Sears’ closures.
According to Business Insider, the carnage is led by Radio Shack, 552 stores; Payless, 400; The Limited, 250; Family Christian book stores, 220; hhgregg (appliances, electronics and furniture), 220; Wet Seal clothing, 171; Bebe women’s clothing, 170; Crocs, 160; Gamestop, 150; and J.C. Penney.
J.C. Penney left Crossroads Center in Waterloo in 2015. The last area Kmart store was shuttered in January. Earlier this week, Petco in Waterloo and Rue21 in Cedar Falls became casualties.
Blame Amazon and its cyberspace compatriots to some extent for establishing discount retail outlets lacking the overhead of “bricks and mortar” stores.
Amazon sales now total $80 billion annually (Sears is at $22 billion), according to the Atlantic magazine. Consumer Intelligence Research Partners estimates 54 million Americans have $99 annual Amazon Prime memberships with free, two-day shipping, which extrapolates into 46 percent of all households.
Politicians are part of the problem, too, refusing to impose sales taxes for online merchants without a presence in the state — not contributing property or payroll taxes either. Amazon, which has taken considerable heat on that issue, took that initiative in Iowa this year.
It doesn’t help local merchants or the local economy in general when consumers engage salespeople in a store about a product, then turn around and buy it online for a discount. That ploy seems evident by a big hike in mobile commerce, now 20 percent of all digital spending. That recalls singer Joni Mitchell’s lyric, “Don’t it always seem to go that you don’t know what you’ve got til it’s gone.”
The Iowa Revenue Estimating Conference has cited the decline in retail sales taxes as one of two factors — along with agriculture — responsible for its failure to accurately project the state’s income. That total shortfall this year amounted to nearly $250 million, resulting in budget cuts and borrowing from reserves.
Consumers’ changing tastes are another factor cited by the Atlantic.
Sales of clothing are down nearly 20 percent since 2000, while expenditures for “food and drink” have grown twice as fast as retail sales — now exceeding grocery purchases. Travel also is taking a bigger share of the consumer dollar.
The U.S. also is “overretailed,” as Business Insider notes, with 23.5 square feet of retail space per person, followed by Canada, 16.4 square feet, and Australia, 11.1 square feet.
Retail job losses, according to the New York Times, have totaled 89,000 since October, which is more than employment in the entire coal industry, which President Donald Trump is trying to resurrect. J.C. Penney alone will account for 5,000.
More than 8 million people work in the retail sector, primarily in sales or as cashiers, the nation’s two largest job classifications. As stores struggled to be competitive, their pay stagnated. The median income was less than $25,000 in 2015, according to the Bureau of Labor Statistics.
Success in retail has long been regarded as a Darwinian survival of the fittest — those who adapt will survive. Wal-Mart, for instance, is considering discounts on merchandise bought online if the consumer picks it up in the stores, saving shipping expenses.
Nearly a half-century ago, climate-controlled shopping malls with acres of free parking turned many city centers into retail ghost towns with scores of empty storefronts.
Now, in many locales, the situation has been reversed. Vibrant downtowns have become gathering spots, providing a sense of community, with eateries serving as catalysts, amid specialty boutiques that provide an ambiance many retail chains and big box stores can’t match.
Society now has to deal with thousands of displaced retail workers and the fate of many hollowed out or deserted shopping and strip malls — a few converted to satellite college campuses or other uses.
As private investments, they lack the traditional allure of downtowns — often regarded as “the heart” of a city — but remain a permanent part of our structural landscape. While many of their occupants struggle to stay viable, they also need a reimagining to buck online trends.