Trying to determine the state of our nation for real, this author is reminded of a former President’s reelection statement: “Ask yourself, are you better off now than you were four years ago?” Newspapers and TV anchors assure us that the U.S. economy is, indeed, doing well. Others warn that a slowdown has already begun (to coincide with the 2020 National elections, no doubt). However, few Main Streets are fully tenanted, with sole proprietorships giving way to big box retailers and shopping malls. That’s nothing new, but now, in 2019, the future for some of these major retailers is not looking that bright. How much of this has to do with the economy or perhaps major shifts in consumer spending habits instead, will be explored in this article.
Except for Apple Store, this author has little interest in visiting the nearby mall. However, a recent trip to that emporium provided grist for this article. If the state of the economy can be gauged by the number of cars in the parking lot, then as a nation we appear to be doing well. It still takes upwards of five minutes to locate a convenient place to park. If that’s true, then what is going on at CVS, Bed, Bath, & Beyond, the Gap, and even J.C. Penney’s???!!! People still need toothpaste, towels, trendy jeans, and dad shirts, right? These household name retailers’ reach extends clear across the country and for many, their storied history goes back almost 80 years. And yet all of them are closing a disordinate number of stores this year.
But wait, there is more! Perennially in trouble, it seems, Sears is yet again, declaring it has to close stores to stay alive. Not to stay in the game, mind you, to stay ALIVE. The brand even sold its proprietary brand of Craftsman tools to Lowe’s, which incidentally is also closing stores left and right. Its major competitor Home Depot isn’t, but Lowe’s is. The message here is that construction starts have increased and HD caters to contractors. Lowe’s demographic is the homeowner. Yes, in real estate it is a seller’s market, but dollar for dollar a truckload of lumber and drywall costs way more than a patio set and barbecue grill.
Macy’s, that legendary 19th century retailer, is selling its flagship store. Yes. Herald Square is going up on the block. The auction block. Last year Lord & Taylor allied itself with Walmart, a move which would have been unthinkable only a few years ago, but today, somehow, it just seems right. Taking their cue from other big box stores, Kohl’s, Target, and even Starbucks, who posted less than stellar holiday figures in 2018, are heading off trouble at the pass and closing stores that are losing business, while allegedly opening new outlets in less competitive territory.
Consumers’ Buying Habits Shift to Shopping Online
And given the international reach of the internet, just where would those less competitive regions exist? That may actually be at the crux of the matter. The economy may not be quite as bleak as our storefront observances seem to be telling us. The fact is, that the internet has made binge shoppers of us all, and with upgraded blockchains and distribution options, we can be in bed shopping for items and waking to find they have arrived on our doorstep overnight.
Such options make it much easier to purchase just about anything, and customer service as well as the returns processes have been honed to a near science so there is little risk for consumers. The almost instant gratification from buying at a brick and mortar has been the ‘Night Before Christmas’ expectation that a package full of goodies, or at least the paper towels you need, will arrive before you run out.
There is another reason that consumers are turning away from shopping locally at their big box stores. Choice. When you buy at a local store, a staffer, a Buyer, has determined what merchandise, styles, brands, at what prices people in that area can afford, and more importantly, what will turn the store the biggest profit. On the internet, however, the shopper is the Buyer, and the world is their playground. Like European fashion? As it turns out, Europeans like American dollars. So many foreign-based website businesses have English and American versions where it is easy to see the price for goods in our currency as well as the option to have them shipped quickly and affordably.
Back down at the shopping mall, one hears that so many big name retailers, mostly from the world of fashion, are trimming back their overhead. That means closing expensive-to-run brick and mortars, and shaving the cost of staff/salaries in favor of boosting their investment in their online enterprises. Its easier and more profitable for retailers to invest in their supply and distribution chains. Online retailers can save on warehousing as well since they can arrange to buy direct from manufacturers thanks to technology-driven distro upgrades.
For consumers, the Point of Sale aspect of buying online has vastly improved over the past decade. Shopping carts and transactions are now encrypted to the point where consumer trust has been gained. It is a brave new world in retail. Those who will survive will not only pay close attention to what consumers want, but anticipate their needs and get there beforehand.
In an interesting sidebar, seasonal retail jobs such as around the winter holidays, used to be a metric to close out unemployment figures on an uptick. Those statistics seem to remain low, however for the last two years retail job openings during the fourth quarter have nose dived. Retailers, such as Walmart, have opted instead to offer overtime hours to their existing staffers and not hiring on additional workers during the so-called busy season leading up to Black Friday, Thanksgiving, Hanukkah, Christmas, and New Year’s.
Finally, this author, who is well-rounded intellectually and physically, is not saddened to see that Victoria’s Secret, which celebrates the svelte female form with scanty underwear and lingerie, is closing 53 stores in 2019. This is a record for the chain as the number represents 3x their norm. However, the economy and the internet got nuthin’ to do with that! Analysts say that the majority of women, and their husbands, favor comfortable underwear styles in natural fibers that are more size-inclusive. What waaaaah!