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Here’s another knowledge bomb: it’s going to keep growing for the foreseeable future. Huge surprise, right?
Signs of a Reckoning
Retailers eye their competition relentlessly, and the sector also has notoriously thin margins.
The big retailers must have seen the “retail apocalypse” coming. The question is: what did they do about it?
Well, companies like Sears failed the shift to digital altogether – in fact, it is even widely speculated that the former behemoth might file for bankruptcy later this year.
The majority of other companies, on the other hand, are trying to combine “clicks and bricks” into a cohesive strategy. This sounds good in theory, but for established and sprawling brick and mortar retailers with excessive overhead costs, such tactics may not be enough to ward off this powerful secular trend. Target, for example, has had impressive growth in online sales, but they still only make up just 5% of total sales. As a result, the company’s robustness is also in doubt.
Wal-Mart took another route, which could potentially be the smartest one. The company hedged their bets by buying Jet.com, which was one of the fastest growing online retailers at the time. Later, they followed up by buying an online shoe retailer to help fill a perceived gap in footwear. Recent reports have surfaced, saying that these acquisitions are leading to staff shakeups, as the company re-orients its focus.
After all, going online is not just a tactic to boost sales in the new era of retailing. It has to be a mindset, and one that is central to the company’s strategy. Hopefully Wal-mart gets that, otherwise they will also be in trouble as well.
Apocalypse Now
In the midst of all of this is what is described as the “retail apocalypse”.
There are two main metrics that are pretty black and white:
Number of Bankruptcies: We’re not even one-third through 2017, and we already have about as many retail bankruptcies as the previous year’s total. If they continue at the current pace, we could see over 50 retailers bankrupt by the end of the year.
Number of Store Closings: So far we’ve seen roughly 3,000 store closings announced in 2017, and Credit Suisse estimates that could hit 8,600 by the end of the year. That would easily surpass 2008’s total, which was 6,200 closings, to be the worst year in recent memory.
Here’s some of the companies that have already filed for bankruptcy:
- Gordmans Stores
- Gander Mountain
- Radioshack (again)
- HHGregg
- BCBG Max Azria
- Eastern Outfitters
- Wet Seal
- The Limited
- Vanity Shop of Grand Forks
- Payless Inc.
- MC Sports
And here are the store closings occurring as a result of the retail apocalypse:
Yup, seeing it in my area. Suburban and relatively wealthy St. Louis. It is a little scarey, slowly at first then all the sudden.
The next twenty or so years will be very interesting. I’ve long heard that new technologies disrupt by also create new jobs/industries. But, I fail to see how new business methods aimed at eliminating labor is going to help labor find new jobs.
I have been watching it happen in the big box pop tart industry for a while now. Gander Mountain was the big one. Others are going to follow suit – here we have “Wholesale Sports” which is owned by UFA (United Farmers of Alberta) and which owned the Sportsman’s Warehouse chain in the US. Everyone wants on board while times are good but when times get bad they have no plan. They are busy closing locations north of the border right now.
Bass Pro and Cabela’s have opened two new locations here in the past year. I think Cabela’s will be ok but Bass Pro is massive, in a bad location and in my humble but educated opinion, will not generate the dollars per square foot that will be required to keep it afloat. I guess we’ll see.
The benefit to big-box is buying power. The downside to it is that buying power is often abused and the corporate structure is so large that they cannot react properly to a downturn. They cannot manage expenses (especially fixed ones) with any degree of efficiency and once the cash flow slows they get cut off from the manufacturers fast. Once that happens it is a death spiral.
Once the big boxes lose monopoly and chinese wage arbitrage power they are going to be dead ducks, for exactly the reasons you state, Francis. Nice post
Star- When does El Trumpo jump in to save the day before we circle the bowl for the last big flush? Waiting……..
BL, like most Americans who believe they will go to heaven when they die simply because they’re American, you seem to think Trump has any concern about Americans circling the bowl.
I read that Trumpistan is in dire straits. White America occupies Trumpistan, they are the early victims of this great recession. The scary thing is they are the canaries in the coal mine. The big box closures are the early signs that the great recession is reaching the coasts.
Trump’s electoral map illustrates how this necrotic cancer is radiating from within to the outer regions of the country.
Hey, you dumbfucks, they didn’t vote for Trump because things were going great with Barry. So why do you down-thumb me for agreeing with the article? Are you morans?
Unless it was cancelled, Bass Pro bought out Cabela’s.
Not sure what the status is on the US side but it is being reviewed here in Canada still. It _may_ not happen north of the border unless something has transpired that I am not aware of.
Yes indeed Francis….. Bass Pro approached Cabelas to “acquire” their stores just a little over a month ago. I’m sure that was to “eliminate” any competition within 100 km of a Bass Pro. However the location of Bass Pro just happens to be in the middle of nowhere, near any bus transportation to the point you need a vehicle (or ferry) to get to them. Even the employees at minimum wage are complaining that there is no access.
Reminds me of the farmer who wanted a baseball field where he once grew corn…….WAIT A MINUTE!! Tsawassen Mills once WAS a corn field!
I heard a rumor (have not confirmed it yet cause I don’t really care) that some of the businesses that populated that mall when it opened have already left. If it were true it would not surprise me. The ‘giant mall’ model has been on the decline for awhile. I suspect if it fails the natives will transform it all into a Casino. THAT people will drive for.
Indeed they will!!
Greetings,
The USA has a ridiculous over capacity of retail space. I believe we have 4X the retail space per person as the Europeans have and, last time I checked, they seemed to have all the plastic crap they need. Retail space could collapse by half and we’d still have twice as much as everyone else. Expect it.
Gravity is a bitch and watch as government loses its mind and attempts to turn every empty big box into a satellite campus of some waste of time community college.
A community college is not a waste of time.
Education is what separates the men from the moozies.
I get your drift, though, you mean it will be a wasted effort to keep the malls occupied.
A community college is a 100% waste of time. What knowledge is locked up in a community college that couldn’t be found online and for free in 5 minutes? What??? I don’t know about you but I’m not going to pay for something I can find for free and probably better.
Depends on what your CC offers. A number of CC’s teach vocational/tech skills for welding, plumbing, electricians and labor. In addition, CC’s often offer classes at a more affordable rate per credit and so anyone that may want to begin a field of interest, even as a hobby, can find courses that will get their feet wet and allow them to continue study on their own with a basis of theoretical and/or applied knowledge. CC’s are probably more valuable then the big univ’s given many univ’s dont offer any labs or application anymore.
I was glad to find classes in electricity and welding for a refresher and for safety at the CC’s out here on the coast though actually venturing across the campus amongst the current student body was a pain in the ass.
Nickel – you know I loves ya, but that is bullshit. A good friend of mine teaches at a CC. Any person would be one lucky SOB to get him as a teacher. Skilled, educated, switched on, a true gentleman.
You cannot replace good teachers with an online experience.
I think Nickleodeon has an ax to grind. digitalpen has a better comment. Try learning jet engine maintenance online, nickle.
Same thing happened in a small town that decided that it needed 2 malls instead of one to support a population of 7000. It eventually became an extension of a local college that it too became a non entity due to the fact that 50,000 sq ft of empty space was too big for even a small college at $125 sq ft per month!
To save money, retailers hire Blacks because of the IRS wage subsidy. Black employees drive away customers. That’s a death spiral too.
Well now, I was wondering why our neighborhood retailers, Target and Vallarta suddenly have black cashiers.
This is all a nefarious plot to take jobs away from us illegals. Damn that Trump.
Hadn’t thought about that, or if illegals drive away fewer customers or not, or which group will steal the most. Managers need to know.
Bob, monolinguals are a dying breed. My buddy John said his daughter couldn’t get a job because she doesn’t speak Spanish. He thought it was an outrage. Yet, I find the black chick behind the deli counter at Stater’s speaks Spanish. Do we curse the darkness because we don’t want to press another button for English or do we give credit to folks who stand up to the challenge?
Speaking of which, who are you going for; Canelo or Chavez Jr.? Let me prejudice you by saying a lot of Mexicans are going for the white hope, Canelo. However, Chavez Jr. is the son of national champion Julio Cesar Chavez
Here’s Mexican culture (not in any particular order) in a nutshell: El Norte, Banda music, soccer (futbol), boxing, wrestling, beer, women.
I watched the video and like Canelo as a person; I think he needs more weight training but both guys look soft to me; I weighed 220 and used 100 lb dumbbells. Will be a good fight for sure. I studied Spanish as required but after 2 years, could only read it; wish I could have done better but even English was very hard for me. Bilingual is great but would have been a waste of precious time at FSU because I was being “paid” to learn Math and Science which were easier but not that easy.
Mexico cultivates superstar Mariachis, Wrestlers and Boxers. The best come from the bottom, Vicente Fernandez tried to promote his heir, Fernando, but it didn’t take. El Hijo del Santo doesn’t enjoy the popularity of El Santo, neither does Blue Demon Jr.
Given that track record, it doesn’t look good for Chavez Jr.
We can’t say either one is the new JC Chavez, maybe the era of great Mexican boxers is over. Here’s the theme: Canelo is Rocky vs the spoiled brat Chavez Jr.
Mexico doesn’t have much luck with soccer players. They have the worst novela writers ever. One of their best novelas was a Brazilian rip-off – La Fea Mas Bella. I think I shall write to them to say so. I suspect they already know but they don’t care.
Hard as I try, I can only find the dreaded “CHINA” stamp
on anything I might want to have or replace. I have extra
“stuff” so I don’t actually need anything. Not really.
Recreational shopping is out, replacement shopping = expensive
or cheap junk, so….very little shopping except for consumables.
The mall stores will have to give up because no one is going there.
Mall movies? Forget it. Mall food? Rice and veg for $6-7 bananas.
The thrill is gone.
That’s the beauty of planned obsolescence. Out with the old, in with the new, including people.
I used to work for Sears at a 16 bay auto center. Totally lied to for the job. When you work 74 hours a week you hourly drops to about $11.OO an hour. I have not worked for Sears for 3 years.
Just because I can I logged onto the corporate site with my password. Yup due to idiot running the place I can still see reports of every auto shop and retal store in the system.
Get.
Out.
Now.
Would love to buy the purto rican sears auto center. Due to some clepto laws that shop does 300k a month.
Yeah bullshit. That Amazon is killing business reminds me of that BS of Wal-Mart is running out other retailers. Nobody liked Wal-Mart. Its products sucked. They didn’t run other retailers out, they got customers whose dwindling incomes couldn’t afford the other and better retailers anymore. This isn’t “planned obsolescence” or “creative destruction”, its a massive downward spiral where falling wages are destroying all the businesses and bringing you DOWNWARD. Wal-Mart is bleeding Red now. Amazon isn’t making huge coin, either. High end retailers like Macy’s are also closing stores. That place is like Disneyland for women. They LOVE it. No way they go to fucking Amazon now. They went to Macy’s for the service and to try stuff on. These girls don’t have the coin to buy anything there anymore…
Don’t shop at Amazon any more after having my credit card compromised there three times. How do I know it was compromised there? Because I only used that particular credit card for Amazon purchases and nowhere else. Of course, their answer was “Didn’t happen in our system!” I called Male Bovine Feces on that anwer. For any millenials that may be reading this, that is Bull Shit in other words.