Submitted by Michael Snyder via The Economic Collapse blog,
If the U.S. economy really is improving, then why are big U.S. retailers permanently shutting down thousands of stores? The “retail apocalypse” that I have written about so frequently appears to be accelerating. As you will see below, major U.S. retailers have announced that they are closing more than 6,000 locations, but economic conditions in this country are still fairly stable. So if this is happening already, what are things going to look like once the next recession strikes? For a long time, I have been pointing to 2015 as a major “turning point” for the U.S. economy, and I still feel that way. And since I started The Economic Collapse Blog at the end of 2009, I have never seen as many indications that we are headed into another major economic downturn as I do right now. If retailers are closing this many stores already, what are our malls and shopping centers going to look like a few years from now?
The list below comes from information compiled by About.com, but I have only included major retailers that have announced plans to close at least 10 stores. Most of these closures will take place this year, but in some instances the closures are scheduled to be phased in over a number of years. As you can see, the number of stores that are being permanently shut down is absolutely staggering…
180 Abercrombie & Fitch (by 2015)
75 Aeropostale (through January 2015)
150 American Eagle Outfitters (through 2017)
223 Barnes & Noble (through 2023)
265 Body Central / Body Shop
66 Bottom Dollar Food
25 Build-A-Bear (through 2015)
32 C. Wonder
21 Cache
120 Chico’s (through 2017)
200 Children’s Place (through 2017)
17 Christopher & Banks
70 Coach (fiscal 2015)
70 Coco’s /Carrows
300 Deb Shops
92 Delia’s
340 Dollar Tree/Family Dollar
39 Einstein Bros. Bagels
50 Express (through 2015)
31 Frederick’s of Hollywood
50 Fresh & Easy Grocey Stores
14 Friendly’s
65 Future Shop (Best Buy Canada)
54 Golf Galaxy (by 2016)
50 Guess (through 2015)
26 Gymboree
40 JCPenney
127 Jones New York Outlet
10 Just Baked
28 Kate Spade Saturday & Jack Spade
14 Macy’s
400 Office Depot/Office Max (by 2016)
63 Pep Boys (“in the coming years”)
100 Pier One (by 2017)
20 Pick ’n Save (by 2017)
1,784 Radio Shack
13 Ruby Tuesday
77 Sears
10 SpartanNash Grocery Stores
55 Staples (2015)
133 Target, Canada (bankruptcy)
31 Tiger Direct
200 Walgreens (by 2017)
10 West Marine
338 Wet Seal
80 Wolverine World Wide (2015 – Stride Rite & Keds)
So why is this happening?
Without a doubt, Internet retailing is taking a huge toll on brick and mortar stores, and this is a trend that is not going to end any time soon.
But as Thad Beversdorf has pointed out, we have also seen a stunning decline in true discretionary consumer spending over the past six months…
What we find is that over the past 6 months we had a tremendous drop in true discretionary consumer spending. Within the overall downtrend we do see a bit of a rally in February but quite ominously that rally failed and the bottom absolutely fell out. Again the importance is it confirms the fundamental theory that consumer spending is showing the initial signs of a severe pull back. A worrying signal to be certain as we would expect this pull back to begin impacting other areas of consumer spending. The reason is that American consumers typically do not voluntarily pull back like that on spending but do so because they have run out of credit. And if credit is running thin it will surely be felt in all spending.
The truth is that middle class U.S. consumers are tapped out. Most families are just scraping by financially from month to month. For most Americans, there simply is not a whole lot of extra money left over to go shopping with these days.
In fact, at this point approximately one out of every four Americans spend at least half of their incomes just on rent…
More than one in four Americans are spending at least half of their family income on rent – leaving little money left to purchase groceries, buy clothing or put gas in the car, new figures have revealed.
A staggering 11.25 million households consume 50 percent or more of their income on housing and utilities, according to an analysis of Census data by nonprofit firm, Enterprise Community Partners.
And 1.8 million of these households spend at least 70 percent of their paychecks on rent.
The surging cost of rental housing has affected a rising number of families since the Great Recession hit in 2007. Officials define housing costs in excess of 30 percent of income as burdensome.
For decades, the U.S. economy was powered by a free spending middle class that had plenty of discretionary income to throw around. But now that the middle class is being systematically destroyed, that paradigm is changing. Americans families simply do not have the same resources that they once did, and that spells big trouble for retailers.
As you read this article, the United States still has more retail space per person than any other nation on the planet. But as stores close by the thousands, “space available” signs are going to be popping up everywhere. This is especially going to be true in poor and lower middle class neighborhoods. Especially after what we just witnessed in Baltimore, many retailers are not going to hesitate to shut down underperforming locations in impoverished areas.
And remember, the next major economic crisis has not even arrived yet. Once it does, the business environment in this country is going to change dramatically, and a few years from now America is going to look far different than it does right now.
They couldn’t have done it better if they tried.. oh, uh, wait…
I see all these store closings as a positive step… for me.
With fewer places to shop, I’ll be less likely to stop at the malls and other retail outlets.
Already I’ve changed my shopping habits.
First I look to Amazon and then elsewhere. Usually everything I want, except for groceries – but sometimes them too – I can get cheaper online.
Getting away from going downtown or to the malls has led to other changes.
Just as we’re avoiding stores, my wife and I are avoiding restaurants, except for taverns – our town has America’s best breweries.
Picnics and trading meals with friends is so much more enjoyable than wondering why you spent $50+ for lunch and felt gypped.
We’re doing more on our own, spending much less, and liking it better.
Keep your money in your pocket and create your better life.
Echo Jackson.
I have forsaken credit and pared my shopping to repair and replace for many years. I buy the same type of clothing over and over anyway, and 80% of what’s in the stores is nothing I like or consider appropriate for my age or my life, so why spend money I will need in retirement on stuff I don’t even really want and that consumes limited closet space? When I do need clothing, I first look at the consignment shops, where I have found many high-quality and designer garments that have scarcely been worn, for a fraction their retail price. Keeps the money in town and supports a local business.
As for other things, I shop Craig’s List for furnishings. I hit the public library for books- Chicago has one of the finest public libraries in the U.S., so why spend money on books? I buy only those that I really love or that or so in demand (like Griffith’s THE CREATURE FROM JEKYLL ISLAND) that you have to wait for months to borrow a copy. For those, I shop Amazon and buy them used.
Music- all Mp3 or used CD, and I now have enough on my hard drive to stock a radio station. I dropped my e-music subscription long ago, after downloading an ample library of classical and jazz.
I go out once or twice a month at the most, to a favorite local, moderate-priced restaurant. I “brown bag” my work lunch. Groceries are usually purchased at Aldi’s, or if at a mainstream store, are private label.
Cleaning supplies- I have found that vinegar and baking soda are not only cheaper than, but far superior to branded cleaning products. I am learning to make my own detergent, which is very easy. Most recipes will make enough for $5 to supply a household for a year.
The retail scene should never have become so bloated to begin with. How did we ever need or justify over 40 sq ft of retail per man, woman, and child in this country, when we had 4 sq ft of retail in 1964. I don’t remember there being any shortage of consumer baubles to waste your money on at that time. The fact is that we became overly dependent on consumer retail as we lost our manufacturing, and on credit to drive the retail. That’s all over now and should have been over a long time ago.
Go eander around a home depot sometime. There is less and less space given to supplies and DIY stuff and more and more manufactured products and sales desks to close the deal. Pallet after pallet of every kind of clutter chinese slaves can put together. And not enough buyers to justify the space. They are channel stuffed to the gills with inventory.
Discretionary spending is the lifeblood of non-essential retail and service businesses. Pare it back per Jackson and Chicago above, keep your consumption on a back-to-basics basis and you will be at the forefront of an economic paradigm change that is for all practical purposes preordained.
I wouldn’t know about Homo Depo or Warmart, but many of the gas station stores are empty along I-10 in the Big Bend of Florida but I don’t see any Tractor Supply Centers on that list so some people are waking up. After a couple more months of serious economic down, even the dim bulbs will see it and then the death spiral will increase; economic collapse is just a few months away and how will the Obama lickspittle lie & spin their way out of that?
I hope that shit hole Best Buy goes down the tube. Here in Minnesota they got the city of Richfield to use public domain to evict 50 or so homeowners so they could build the Best Buy corporate office building.
There are 46 stores in the list. In the last 5 years I’ve been to just 7 of them.
— Barnes & Noble
— Dollar Tree
— Office Depot
— Sears
— Staples
— Target
— Walgreens
Stucky makes a good point I have only been to seven myself Walgreens, Staples, Home Depot, West Marine, Pier One, Macy’s and Barnes and Noble. So what does that say about retail? I don’t even know what some of the stores on that list even sell, I suspect most of them sell clothes. Working class people can’t afford the latest fashion we buy things that will last or are priced to sell. If I can buy polo shirts at Costco for $9.99 why would I ever want to go to the mall to pay three or four times as much for basically the same thing. The internet and companies like Costco and Walmart have changed the habits of how the masses shop.
NO ONE IS GOING TO SAY WHATS WHAT , YEAH MAYBE GUYS LIKE SNYDER WILL GIVE THOSE WHO EVEN DARE TO READ THIS KIND OF INFORMATIVE JOURNALISM OOPS ! caps lock ! as I was saying . The real “boot smashing your face forever” is almost impossible to focus into clear future reality , for anyone , as if I thought the end was coming tommorow i Probable would not get out of bed in the morning , in a way these little writ’s serve as a enabler for the system to keep on going , as the us consumer is 69.xx% of the economy, and you wouldn’t want that to stop ! It would only hasten the inevitable.
There are only 8 stores on that list my wife and I have shopped in…………ever. Our list is the same as Stucky’s with the addition of Radio Shack. RS did not have what I needed so there was no sale. It has been years since I bought anything there. Dollar tree is a fucking joke as their per ounce/unit price is higher than a regular store. We’ve shopped in Penny’s twice in the last ten years and twice in Sears in the past 15 years. I bought some benadryl in Target about six months ago because I remembered I needed it on the way home and we were already in the strip mall parking lot they are a part of. Barnes and Noble closed all their stores around here years ago. We have Hastings instead which I preferred anyway. I think I shopped in B&N twice. Office depot/Staples are both so similar I use them interchangeably but only as needed. We bought our last two laptops at Office Depot. We use Walgreens/Rite aid interchangeably as well. Except for the sign out front there is no real difference once inside.
Much like Chigaco999444, we have pared our shopping to repair/replace and basic necessities. We’ve taken it one step further by purchasing all the jeans/pants, t-shirts, socks, undies, shoes, boots, bed linens and other things we are likely to need for the rest of our lives. This front runs inflation by locking in today’s lower prices/taxes now and lowers or eliminates future costs for these items.
But don’t worry, millions of people are getting free Xanax and Oxycontin and Insulin, free Doritos and lowfat yogurt and sugar free soda, so it will all work out fine.
Until the bill for the landwhales comes due, starting in 2007.
If things manage to hold together that long, the real cost of Ocare is going to hit property and business owners right between the eyes.
Wonder how much houses will be worth if the city own 70% of them?
Fun times, fun times. Hopefully all these retail workers will sign up at the University of Phoenix for their $30,000 in debt for an Associates degree.
Better yet, at a state college so they can use the loans for rent, doritos, ganja and pizza, and the new Apple Watch.
Yep, success in ‘murka keeps getting sweeter.
Got you beat, Stuckey, I’ve only been in 3 of them.
I bought a pair of shoes at Macy’s three years ago when my daughter got married. I’ve been in Walgreens a few times. Target a couple of times a year.
Yeah, they’re fucked.
Fuck em. Thank all the genius folks in Washington with no term limits. They will go down in history for riding the country down the drain.
I emailed this thought to My senator Kyle and a month later i read he was resigning. Maybe he was one of the smarter ones.