Tens of thousands of stores have closed their doors for good last year, and as soon as people are encouraged to leave their homes and resume their habits, they will probably find a very different scenario because, according to newly available data, many retailers have experienced unrecoverable losses, which means that the meltdown will continue well into 2021. The year has already started with Macy’s announcing 37 store closures all around the nation. Last Tuesday, the company revealed that the cuts come as an effort to regain profitability and, as previously disclosed, the chain intends to close 125 stores by 2023, adding to the list of the many victims of the retail apocalypse.
It’s no news that the elimination of brick-and-mortar stores started with the growth of online shopping tendencies, particularly with Amazon leading the entire e-commerce retail sector. But now that consumers are stuck in their homes, and shutdowns have been compromising the operations and, therefore, the revenue of these stores, the deterioration of the industry has happened faster than expected, and things are about to get worse.
Traditionally, Americans love to shop and most American shoppers have favorite stores, places to which they developed a trusting bond and have been regulars for years. That has made the current meltdown of brick-and-mortar retailers in the face of growing e-commerce that much more upsetting for a lot of people as their familiar, acclaimed retail institutions are going extinct.
Evidently, consumers’ pain is a minor determinant when compared to the impacts on staff and suppliers, who have either undergone or just about to undergo termination. The mass lay-offs triggered by the industry’s collapse is inflaming even further the labor market crisis and putting these people in serious doubt on how their livelihoods will be affected when their store closes.
Not even the holiday season has helped companies to produce enough revenue to survive through this dark winter. Last years’ holiday shopping has made it clear that most retail sectors are not out of the woods yet and might experience further losses.
What used to be one of the busiest periods for brick-and-mortar stores, actually had a disappointing attendance and record-low sales. Shopping centers have never been emptier during that time of the year. Experts have been arguing that the retail apocalypse may also lead to a major collapse of shopping malls.
Economists are forecasting that retail sales won’t regain traction the same level of traction they had in 2019 until at least 2022. Needless to say, this extended time of financial constraints is the perfect recipe for a disaster.
Retailers suffered their worst annual sales performance in all U.S. history in 2020. Non-food products demand dropped nearly 5%. The overall contraction of one of the most powerful sectors of the U.S. economy is projected to be at 0.5% to 1%, depending on how different surveys conducted their calculations. Either way, it is already the worst annual performance in almost 25 years.
The decay of non-food retailers isn’t just affecting businesses. According to an Entrepreneur op-ed, “these companies hire workers who, unable to pay their rent, are now facing a grim situation. Some of the most populous commercial hubs in the world are seeing the result of the retail apocalypse through a reduction in real estate values as workers migrate to less expensive areas”.
That is to say, the commercial real state crash that is looming is also being propelled by the retail apocalypse. And by the look of things right now, everything is hanging by a thread, and a collective collapse like this one that has been forming for years will undoubtedly slow down the prospects for a recovery, compromising the U.S. economic strength for over a decade.
Visit our website: https://www.epiceconomist.com