While it’s estimated that President Trump has added approximately 75,000 jobs to the manufacturing sector and has more or less been responsible for a $3 trillion rise in the stock market, one sector of the nation’s economy is lagging behind drastically in terms of profound recovery: retail.
In fact, retail has not been recovering by any stretch of the imagination since President Trump took office; rather it’s been continuing to fail. But at least one can likely say with authority that this is not Trump’s fault; this phenomenon has been present for some years now, with roughly 300 malls and 700 big box stores closing between the years of 2014 and 2017 alone.
However, as opposed to other parts of the nation’s economy, this trend only looks to continue, and the major reason why is the continued rise of a liberal billionaire’s empire: Amazon. Amazon.com is at least 16 percent owned by its founder Jeff Bezos, and Bezos has worked overtime to make sure that his company has crushed competition in nearly every market segment it’s entered, from books to toys to household goods and everything in between.
In fact, Amazon now carries so many products that one has to ask what they don’t carry instead of what they do. One can purchase anything from a full set of stadium bleacher seats to a single clothing button on Amazon, and if you spend enough or join Amazon Prime, the shipping is free, and delivery is fast.
There are no salespeople to deal with and no lines to wait in. The website is open 24 hours a day, 365 days a year, and you can shop in your underwear without leaving the convenience of your home. Those are conditions that are nearly insurmountable advantages for brick-and-mortar stores to compete with, hence, the latter have been dropping like flies since Bezos’ empire has switched into high gear.
Brick-and-mortar stores have myriad costs that a strictly-warehouse operation such as Amazon doesn’t have to bear. They have to keep the lights on, pay for air conditioning, high rent costs for being in a good location, keep their workers and customers happy and limit theft, vandalism, liability lawsuits and store depreciation.
And all of this is not to say that brick-and-mortar stores don’t need their own websites as well, which are supposed to compete with Amazon even as they cannibalize sales at their brands’ physical outlets. Because Amazon has been working in the online space for almost its entire history, the company has had 22 years to refine and streamline its shopping experience and inventory control systems to the point where they’re state-of-the-art.
In fact, Amazon is so ahead of the curve in terms of selling digital products, devices and streaming media that it has customers ranging from Airbnb to the Central Intelligence Agency buying purely online services that a big-box retailer such as Walmart couldn’t dream of being able to offer.
Bezos didn’t start in the retail business; he actually built Internet trading systems for Wall Street banks before he started his company. But by getting into the Internet retailing game early, like Chinese billionaire (and Amazon competitor) Jack Ma, Bezos was able to perfect his processes long before brick-and-mortar retailers realized he would one day be eating their lunch. In 2016, Amazon by itself accounted for 53 percent of all online sales growth.
Today, up to 10 percent of all U.S. retail space — about one billion square feet — is in need of closure, conversion to other use or renegotiation of leases for lower rents in the coming years, according to retail forecaster CoStar Group.
In March of this year, U.S. retailers cut 30,000 jobs, and major shoe and apparel retailers Payless and Rue21 are now filing for bankruptcy. Familiar chains The Limited, Aeropostale and Sports Authority have all gone out of business. Electronics retailer RadioShack declared its second bankruptcy in as many years, and the Gander Mountain, Gordmans Stores and HHGregg chains are also bankrupt.
Legendary big-box retailers Sears and J.C. Penney, with more than a century of retailing history each, are shuttering hundreds of stores, and analysts have been scratching their heads trying to figure out how they’ll be able to have enough funds to keep buying new inventory while paying their sizable pension commitments in coming years.
Luxury retailer Ralph Lauren has announced it will close its Fifth Avenue Polo boutique in Manhattan, a victim of changing times and changing tastes. Kenneth Cole, a shoe retailer, said it will close nearly all of its retail locations in favor of attempting to move its business nearly entirely online. Bebe, a women’s apparel chain, is set to make similar moves.
The number of retail store closings in 2017 is set to be at least 8,600, the highest number in roughly 20 years. A glut of new apparel chains has been a contributing factor. “This created a bubble, and like housing, that bubble has now burst,” said Richard Hayne, CEO of youth-focused chain Urban Outfitters. “We’re seeing the results: doors shuttering and rents retreating. This trend will continue for the foreseeable future, and may even accelerate.
“Today, convenience is sitting at home in your underwear on your phone or iPad,” said Christian Buss, a retail analyst at Credit Suisse. “The types of trips you’ll take to the mall and the number of trips you’ll take are going to be different.”
Even as retailers shutter their doors at alarming rates, Amazon has announced it will be experimenting with finally entering the brick-and-mortar world — first with bookstores, and soon with cashier-free grocery stores across the U.S. In the sweepstakes of earnings, it remains to be seen if that strategy will pay off.
~ American Liberty Report
