It was the epidemic I wrote about in my first blog; the retail armageddon that very few else seemed to see coming. Recently as I’ve been reporting on all the mass store closings of 2017, from brands we as a country took for granted as pillars of our society I’ve been receiving feedback on some great theories of this trend from my readers, as well as many many questions. In my bankruptcy article I received much feedback on how “they always find some way back” when I predicted The Limited’s demise, just four short days later The Limited confessed they were following the foot steps of Kenneth Cole and shuttering all physical store locations.
Most of what I’m hearing is the distinct blame of Amazon one by one taking out the brick and mortar, starting first and foremost with Barnes and Nobles who has seen 158 locations close from 2008 until the first quarter of 2016. Though when you compare Amazon’s great leap in sales to the store closures of Barnes and Nobles, they do not directly coincide.
It appears compared to Amazon’s giant leap in sales since 2007 (despite a giant recession that only began in 2008) has not led to the direct plummet of Barnes And Nobles. Store closures are not limited to Barnes and Nobles though, and as we see retail giants like Sears, Macy’s, and K-mart, as well as fashion titans such as Kenneth Cole, Polo Ralph Lauren, and the recently departed The Limited. Though Amazon has obviously posed threat in competition, it is not what is driving our retail industry into the ground.
Department Stores are not What They Used to Be.
The department stores of today do not hold a glimmer of the lush experience that it once boasted and embraced. “The Customer is Always Right”, Selfridge’s key slogan has been debunked over and over again, and now is an object of public ridicule. This ridicule has sparked the Us vs Them across the check out counter. Combative employees, strict policies pertaining to purchases and returns, have fostered unwelcoming environments that no longer serve as customer-centric havens.
The hashtag #retailproblems, sweeps social media, discrediting the intelligence of customers and the enjoyment of working with them. With the lack in jobs, overqualified millennial, fresh out of college, are out of career options and finding themselves bitterly trapped in retail, just what their high school counselors told them they didn’t want while encouraging them to pursue a costly higher education. The result is a massive sum of student loan debt that is hardly being met by the meager wages as a sales associate with little to no commission as the retail world suffers.
3. The Great Recession And The Discount Epidemic
In 2008 the entire country hit a wall of recession as citizens were finding themselves facing the threats of foreclosures and the unemployment line was at an all time high. With high gas prices, plummeting credit ratings, and shrinking opportunity to land a career consumers were not as apt to spend the reserves of their savings accounts on frivolous commodities. Naturally retailers took an instant hit.
To keep alive and meet the needs of their customers’, retailers began riding extended waves of discounted products and promotions. The income they were receiving was not to the margin they truly needed to maintain a properly managed storefront. Raise freezes for retail managers were enacted, impossible over year sales earning standards were still expected and with that many commissions became the idea of fairy tales.
With the recession was also the rise of in store loss through employee and customer theft.
4. Bargain Stores
That’s right, brick and mortars are cannibalizing their own with the exact same ammunition as their competitor, only six months later. Bargain retailers are taking over the market which sparked with the necessity they held in the recession. Suddenly a trip to TJ Maxx for shoes was no longer a game of finding bargains but instead become a necessity of means.
Though some consumers are finding more change in their pocket since the plummet of gas prices in 2015, they are still gun shy to spend too lavishly. TJ Maxx and Home Goods has become their home away from home, they are familiar with the aisles and employees; having long forgotten the enjoyment and wonder shopping malls once possessed.
All in all these four categories are merely catalysts and do not prove the true root causes of failure for individual employers. While some retailers are looking to restructure to rebrand or keep up with technology and changing times; other sellers are finding it far more favorable to just throw in the towel after years of a good fight. Here are the 7 unique problems of 7 big name retailers and what they are planning to do about it.