America is having a “retail moment” — and it’s not a good one.
It’s easy to blame all of the industry’s woes on Amazon, the online giant. There’s little doubt that the fifth-largest U.S. company by market cap has been disrupting traditional retailers (I promised myself I would not use the dreaded “B&M” cliche). But online is far from the only source of retail’s problems: The large chains, the malls they usually find themselves in, and even flagship urban stores have failed to adapt to rapidly changing consumer tastes. This lag has been readily apparent for more than a decade.
Note that this is not the product of hindsight; during the financial crisis, it was clear to me that “retail shopping will emerge from the recession with a much smaller footprint than before.” In 2010, I reiterated those views, observing that “the United States still has too large of a retail footprint — 40 square feet of retail space for each person; that is the most per person in the world … that needs to come down appreciably.”
My present views are even less optimistic. We are probably closer to the beginning of that transition than the end. This is a generational realignment in the way consumers spend their discretionary dollars, and the ramifications and economic dislocations are going to last for decades.
This year alone there will be several thousand store closings. Hold aside for a moment the debacle that is Sears/Kmart — that has as much to do with complex financial engineering as anything else — and consider the ongoing changes in retail sales trends. Many factors are driving weakness in U.S. retailing:
Continues at: U.S. Stores Are Too Big, Boring and Expensive