|Closings Will Have Huge Impact On Economy|
Returning to the store closings, while we are often saddened by these we are seldom surprised. An example of our reaction is how fans of Toys R Us expressed their sadness after it announced "everything must go" from its U.S. headquarters - including a life-sized statue of mascot Geoffrey the Giraffe. While the liquidation of the company's U.S. assets got underway to the despair of many on social media many people failed to notice that Toys R Us UK also announced that administrators had stepped in and all of its branches would close too. The U.S. closings resulted in lost employment for its 33,000 employees, this included 1,600 people at its New Jersey headquarters. Adding insult to injury, the state's two U.S. senators and a House colleague called on the chain's owners to "support" those workers any way they can.
Just across the street from my office sits one of the largest malls in Indiana where Sears was one of the original tenants back in the 60s. Both Toys "R" Us and a newly remodeled high-end department store, Carsons, that had only been open a few years have closed their doors in the last few months. Today few of us are shocked to hear that a store is closing even if it happens to be a mainstay of the area, however, as one by one these major stores, known as "anchor stores" close, it now appears the whole mall is in full-fledged liquidation mode as a result of being monkey hammered into submission by a wave of new reality sweeping across America. Paying employees more so they can spend the money elsewhere simply does not work.
Closures Are Set to Accelerate
The fact is a bill is being created as a result of this assault on our brick and mortar retailers and it will come in many forms including defaults on loans and bonds as well as reduced property taxes for local communities. We can also expect a slew of empty buildings blighting our landscape and driving down the value of properties across the nation. With many traditional brick-and-mortar retailers having very heavy debt loads and looking at nearly $1 trillion of debt coming due over the next 3 to 5 years if the economy turns south this might only be the tip of the iceberg. These businesses both large and small are often viewed as the bedrock of our communities and with the closing of each one, a little bit of us goes with them.
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Footnote; This is the first part of a two-part series. The second will focus on the economic issues surrounding retail closings and a suggestion that could level the playing field with online players. Below is a link to an article about how the money-losing United States Postal Service has added to the decline of communities for a few dollars in revenue.
The second article of this series on retail closing has now been published and is located at the link below.