Friday, August 24, 2018

Retail Closings Are So Common They Can Go Unnoticed

Retail stores closings have become so common they often go unnoticed. A new urgency and focus returned to the issue of the battering brick and mortar stores are undergoing with the announcement yesterday that the last Sears store in my city is going to shutter its doors. This is important and part of a much larger story. The problems that exist within what has been graphically described as "America's retail apocalypse" or the collapse of brick and mortar is that it extends past what many people see as retail and also has begun to take a toll on small business in general. Today small business is having its clock cleaned as they are forced to pay higher wages, comply with new government regulations and forced to compete with big businesses backed by Wall Street money.

Closings Will Have Huge Impact On Economy
Across America stand a sea of empty and under-leased buildings that once housed thriving businesses that provided Americans with good paying jobs. A close look at the details surrounding new job formation shows the growth is mostly in low paying part-time jobs and that many people have left the job market to retire early because their skills are no longer needed. To shed even more light on weak links in our so-called recovery we only need to take a closer look at auto sales and student loans. Today roughly a third of those buying cars are taking out sub-prime loans stretched out far longer than ever before and sadly, many young people are facing huge student debt that will affect their disposable income for years to come.

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.

2018 store closures

Closures Are Set to Accelerate

Last year more than 7,000 stores closed their doors, more than twice the amount of stores that opened in the same time period. Question is, with consumer confidence at record levels and the U.S. economy showing strength, why are so many stores having trouble? There are a number of trends at work behind America's retail apocalypse such as retailers taking on too much debt and our own government giving online retailer Amazon special tax treatment as well as the United States Postal Service delivering its merchandise at a discount. State and local governments are even putting packages together with special incentives to lure Amazon to build in their areas oblivious to the damage it will cause in coming years.

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.


  1. A focus on efficiency and the cheapest price destroys small businesses in little towns with big box stores. THAT has been happening for 40 years. Germany outlawed a lot of that with laws on development and opening/closing times. Amazon savages all retail outlets, big and small. We can change our shopping habits and buy local or pass laws to restrict Amazon.

  2. Thanks for the comment, the second part of this two-part series explores the idea of an online transaction fee. If you have time please read it and decide whether it has merit.

  3. Wait, there are Crocs stores? Really?

    I agree with the article as a whole, the middle class has largely been gutted and aside from those who've been able to snag a hold on some upper class rungs (with some real investments, real estate, etc.) the rest of the middle class has been pushed down in to the working class....and now that's being gutted too.

    Why can't the Wall Street money (for example the billions that the 5 mega banks are using to bail out General Electric) instead be allocated to would-be entrepreneurs who can get some small businesses going or to keep existing small businesses afloat?

    Aside from that, where's tax reform for the rest of us working suckers? Time for the bleated sheep to rise up? It's getting to be winter and still they've sheered our coats off for yet another round of fleecing.