Since New Year’s Day, a number of national retailers have announced their growth or suffering and have made decisions accordingly (some leave their head in the sand, of course). In the dynamic landscape of how we as consumers go about acquiring all the things we seem to need, the provision of those goods from the same place all the time is not a foregone conclusion. The circumstances that surround these business decisions for each of these retailers paints a canvas of fog for where the consumer’s desires are and which retailers are adapting well in the fog.
It is very easy to make the obvious “it’s Amazon” response, but, as with everything, it is far more complicated than that. Not only is the consumer decision making and shopping changing, but, the tastes are always changing as well. (Here is a blog post I wrote in April 2014 called the Decline and Fall of the Regional Mall.)
To borrow from two data trajectories, The Personal Consumption Expenditure (CPE) index has risen by 30% since 2010 (and by 100% since 1999) meaning we are collectively spending 30% more than 2010. Online shopping has risen from 2010 4.6% of all consumer spending to 8.3% in Q4 2016 (and 0 in 1999) meaning less than 10% of our overall spending is online. There is far more to data than meets the eye with non-correlated data sets like PCE and Consumer spending. However, the fact that retailers continue to open new stores shows confidence from those retailers that they will be able to navigate the future better than the retailers on the closing store side.
The landscape of retail is ever-changing regardless. How it will look in 20 years is completely unknown (Amazon is only 23 years old with 268,000 employees!). Relatively unskilled workers are seeing corporate jobs in retail disappear. Families and sometimes whole communities (when 2 or 3 stores all close at the same time) feel these losses (and gains). It was a boom at one time, and for those who work for these employers, it is looking like a bust.
Here is the scorecard thus far along with the inception year of the retailer and the # of jobs to be lost on the closings.
On the downsides (largely closing in 2017)
The Limited – founded 1963 – closing 250 stores – 4000 jobs
Wet Seal – founded 1962 – closing 338 stores – 3700 jobs
Macy’s – founded 1858 – closing 68 stores – 10,000 jobs (many jobs in corporate offices)
Sears/Kmart – founded 1886/1962 – closing 150 stores (some announced the last week of 2016) – 7,500 jobs (est.)
Whole Foods Markets – founded 1980 – closing 9 stores and 3 kitchens – 1200 jobs (est.)
MC Sports – founded 1946 – closing 66 stores – 1300 jobs
Payless Shoes – founded 1956 – closing 1000 stores (may be higher) – 15,000 jobs (est.)
On the upside (announcements for development over extended periods)
The Nike Shop – founded 1964 – opening 600 Nike Shops inside JC Penney
Dollar General – founded 1939 – opening 1000 stores
Warby Parker – founded 2010 – opening 25 stores
Aeropostale – founded 1987 – reopening 500 stores
Announced Closings 1884 in the next few months – job losses over 40,000
Openings 2225 over the next few years
We’ll see what other news develops over the upcoming few weeks. I suspect we have not seen the last.