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America's 'Retail Apocalypse' Is Really Just Beginning (bloomberg.com)
An anonymous reader quotes a report from Bloomberg: The so-called retail apocalypse has become so ingrained in the U.S. that it now has the distinction of its own Wikipedia entry. The industry's response to that kind of doomsday description has included blaming the media for hyping the troubles of a few well-known chains as proof of a systemic meltdown. There is some truth to that. In the U.S., retailers announced more than 3,000 store openings in the first three quarters of this year. But chains also said 6,800 would close. And this comes when there's sky-high consumer confidence, unemployment is historically low and the U.S. economy keeps growing. Those are normally all ingredients for a retail boom, yet more chains are filing for bankruptcy and rated distressed than during the financial crisis. That's caused an increase in the number of delinquent loan payments by malls and shopping centers. The reason isn't as simple as Amazon.com Inc. taking market share or twenty-somethings spending more on experiences than things. The root cause is that many of these long-standing chains are overloaded with debt -- often from leveraged buyouts led by private equity firms. There are billions in borrowings on the balance sheets of troubled retailers, and sustaining that load is only going to become harder -- even for healthy chains. The debt coming due, along with America's over-stored suburbs and the continued gains of online shopping, has all the makings of a disaster. The spillover will likely flow far and wide across the U.S. economy. There will be displaced low-income workers, shrinking local tax bases and investor losses on stocks, bonds and real estate. If today is considered a retail apocalypse, then what's coming next could truly be scary.
"...There are billions in borrowings on the balance sheets of troubled retailers...The debt coming due, along with America's over-stored suburbs and the continued gains of online shopping, has all the makings of a disaster."
Thousands of balloon/ARM mortgages approved for unqualified borrowers also had all the makings of a disaster back in 2008 too.
There's a common trait in the human race that spans thousands of years; a propensity to never fucking learn.
And over-stored is right. It's ridiculous just how many damn choices there are within a mile-long stretch of suburbia. No wonder so many are closing.
On the weekends, Costco usually has 10 lanes of cash registers with 10 people in line each, with baskets loaded to the top, followed by long long lines to pass by receipt checkers to exit the building...The downfall of "retail" isn't all about Amazon.com and online clicks, it also includes the rise of these warehouse stores that sell superior quality produce and products (except for their accidentally unauthorized jewelry and slightly obsolete electronics) as well as buying basic household goods in bulk to reduce cost in a country that has had depressed wages for twenty years. Because of the lower overhead, warehouse stores can be a much cheaper way to buy things than ordering online from Amazon and still offer some of the seasonal and local customizations that Department stores once did.
I need to hurry up and film a zombie film in our local Sears before they close they place down completely.
Going in there is creepy as hell.
BINGO. 10 years ago, online was often junk while retail was quality items. Now, retail sells the same garbage items that the online stores do. There's no differentiation any longer. You can see this when you go to sears.com or walmart.com and half the products are "online only." They are all trying to be Amazon.com. The retailers that survive will be the ones that stop trying to compete in the "race to the bottom."
Sears is the my favorite example. People used to buy Sears appliances, even though they were overpriced, because Sears curated the models with the best reliability and offered longer warranties and local service. Now, Sears products are just rebranded versions of the mid-range to low-end items, they don't have better warranties, and service is now farmed out to 3rd-parties. If the item is 50lbs then you often have to mail it out for service. I am totally okay with paying 200% to get something that lasts twice as long. But so far, I don't know who offers me that any longer.
Apple is one company that isn't competing in the race to the bottom, and is doing well with that approach.
Need I say more?
It's a little ironic that Sears is on the way out these days. A big part of their business used to be the Sears Catalog for mail order. They were basically doing what Amazon is doing before the Internet existed!
"What the American public doesn't know is what makes them the American public." -Ray Zalinsky (Tommy Boy)
Many people used to buy Craftsman tools due to high quality (compared to almost any other consumer brand) plus the lifetime warranty - the math made sense. But for years now the majority of Craftsman tools for sale are made in China ( https://en.wikipedia.org/wiki/... ), the quality has plummeted to Harbor Freight levels, and every time you get a warranty replacement the quality drops. Normal MBA thinking - how can I goose profits this quarter, and my golden parachute will carry me out the door when things go bad. This thinking across American business is whats killing American retail. Why buy crap from Sears or Wall-Mart when I can get slightly better crap faster on Amazon? Or if you don't mind waiting, roll the dice and order your crap directly from China. Related, no connection or affiliate code - I don't go to hobby stores any more, I go to https://hobbyking.com/ . Sure, sometimes the parts that arrive are bad, but most of the time its exactly what the local store offers, at 1/3 the price. If people (in general) don't want (to pay for) quality, and business managers don't care about killing the business, then everything is short term now. Silly people don't realize that trickles down to their own jobs. Or already has.
It can't win on convenience, it can't win on speed, it can't win on experience. It is a monoculture of price reduction
It's been a monoculture of selling lower quality with worse service at a lower price than the competition for a long, long time. Sears drove away mom and pop stores several decades ago, K-mart essentially drove Sears out of business a few decades ago, Walmart drove K-Mart out a couple of decades ago. Now it's Walmart's turn.
There won't be an apocalypse, just another iteration of the same cycle.
Trying to serve the poorest people - who only shop at the places with the lowest prices - is part of the retail problem. If the store is focused on low prices, they can't afford to focus on anything else. This is how Wal Mart came to be reviled by anyone who can afford to not shop there.
Why not just look at the price and stop worrying about everyone else and whether they got a better deal? Why do you care if an item is 20% off of $12.50 or it's $10? Is the product worth $10 to you? Buy it. Fuck the posted discount rate. Ignoring sales, coupons, discounts, et al, is part of being a responsible shopper.
A guy who served under Reagan and Bush I is a "leftist shill"?