Talk to any millennial, and you’ll probably figure out why we’re witnessing a retail collapse. Once-bustling malls are becoming sad, empty carcasses of the past as consumer habits monumentally shift in favor of online and outlet shopping.
Once-mighty retailers are being brought to their knees by these trends, and investors on Wall Street are finally waking up and swallowing a heaping dose of this grim reality. In short, the retail sector is bleeding profusely, and there’s little that can be done to save many chains that used to dominate the landscape.
You might be wondering why you should care. After all, few young people will shed a tear as stores such as Kmart shutter their doors. In reality, the retail death spiral has a lot of implications for our wider economy, including fewer jobs and a whole lot of empty real estate.
If you look at the raw statistics, online shopping is still a very small proportion of total retail sales (less than 10 percent). But if you look at the trends, it’s growing very fast year over year.
It takes quite some time for consumers to get adjusted to shopping online. But for young people, it comes as second nature. Once you become an Amazon junkie, it’s not likely you’ll go back to braving shopping in actual brick-and-mortar stores.
Naturally, it’s just a matter of time before more stores meet their demise as customers permanently take their business to online retailers. We appear to have arrived at the tipping point, as many in the industry suspect that this year may prove to be the acceleration of retail’s long downward spiral.
The Great Recession squeezed American consumers to the point that their habits appear to have been permanently altered. Everyone, everywhere now seems hell-bent on not paying full price, from the ultra-wealthy at Neiman Marcus to the bargain hunters at H&M.
You might have noticed that outlet malls have become all the rage in recent years, as penny-pinching consumers love buying their favorite brands for less. They’re becoming so popular that most of the merchandise they carry is specifically made for outlet malls — meaning that it’s likely a chintzy version of what you would have found at a department store.
The rise of online shopping and outdoor outlet malls has meant many department stores are going the way of the dodo bird.
Retail historically has been a massive source for job creation. Granted, the vast majority of these jobs are low-paying and don’t leave a great deal of room for advancement. Still, census data reveals that retail is the top occupation, employing around 4.5 million Americans.
Thus far, 2017 has not been a good year for retail, and in turn, it’s been horrific for people who work in the sector. As the pace of store closures inches toward a record set during the height of the Great Recession, people are being laid off in droves.
Since October, nearly 90,000 people have lost their jobs in “general merchandise stores.” The New York Times pointed out that this number is higher than all of the people employed in our coal industry. Job losses will likely continue as retail continues to fall from grace.
It’s widely known that we’ve built way too much retail space in pretty much every corner of America and that property owners are beginning to feel the pinch. As vacancies rise, rents will go down, and people will lose billions as property values plummet.
Once a mall loses an anchor retailer such as Macy’s or Sears, it often enters a period of irreversible decline as small stores depend of big stores for foot traffic. Right now, as almost all big retailers are closing down stores, we’ll see a lot more zombie malls.
If you’re looking for a job, as a general rule of thumb, you should probably stick to an industry other than retail. While there are always exceptions, it’s typically a low-paying career and a dead end professionally. We are beginning to realize that the 21st century economy won’t need a lot of retail workers, so it would be best to steer clear.
Regarding those scary zombie malls, our glut of retail space coincides with a nationwide affordable-housing shortage. Policymakers and developers should take note that we need to turn a lot of commercial space in this country into affordable housing. Repurposing that spacer makes sense for everyone.
In the end, the evolving state of retail demonstrates our changing economic reality. The future isn’t dim, it’s just different, and we must adapt accordingly.
This article was originally published on GenFKD.org.
Photo by Randy Heinitz
David is the Editor of Bold. He's especially passionate about millennial economic empowerment. A former local news reporter, David is originally from the Little Havana area in Miami, and later became a pioneer resident of the Disney-inspired town of Celebration, Florida. David holds a Master’s in Public Policy from the Harvard Kennedy School.