From Manhattan’s avenues to rural shopping malls, the American retail industry is heading towards disaster. In 2017, there have been nine iconic retail bankruptcies. RadioShack, Sears, J.C. Penny and Macy’s have decided to shut down more than 100 outlets. Several apparel stores such as Urban Outfitters, American Eagle, Ralph Lauren recently announced that they are closing their iconic thoroughfare.

This deep recession depicts an extinction level event for many large retailer brands. But Gross Product Domestic (GDP) has been growing for last few years, gas prices are low, unemployment is controlled and the last year exceptional wage growth was observed, especially for middle or lower-income Americans.

The reality is that the overall retail spending continues to grow inadequately. Several trends such as the rise of e-commerce stores, the excess supply of malls, and restaurants revival – all factors have greatly contributed to shifting the face of American shopping.

Let’s have a look at some reasons that explain the demise of America’s storefronts.

People Prefer to Buy Stuff Online

success of amazon in retail industry
I think, one of the major reasons for the demise of brick-and-mortar stores and retail shops is Amazon. Amazon’s sales in only North America increased from $16 billion to $80 billion during the last few years. Sears generated $22 billion last year. And the more remarkable fact according to different studies, nearly half of all U.S. families are now Amazon subscribers.

Online shopping is a preferred choice for many people when it comes to books, music, apparel, and entertainment. Simple and easy return policies have made online shopping risk-free and cheap options for consumers. The rise of startups such as Bonobos, Warby Parker, Casper that deal with apparel, glasses and bedding items respectively has made many physical store retailers to provide similar products and the level of ease online.

Mobile shopping, another agonizing experience of inserting private credit card numbers, is getting easier – thanks to mobile apps and mobile wallets. During the last six years, mobile commerce has increased from 2% of digital spending to 20%. People can buy everything online, which reduces the effort required to ambling through shopping malls or retailer shops, avoiding unplanned purchases.

But there will always be a place for retail stores and shopping malls. As people love to feel the soft fabric, try on what they buy and review glitzy outlets. The rise of e-commerce stores not only creates new shopping habits, it also moves individual sales online so that consumers gradually find a good-enough replacement for a shopping mall.

Excess of Stores

multiple shopping malls in usa
It is estimated that there are around 1,200 shopping malls in U.S. And probably it is the major reason for the demise of malls. Cowen and Company’s research analysts think that the number of malls in America grew massively between the years 1970 to 2015.

When it comes to space for the shopping center, America has 40% more shopping space per person than Canada, 5X more than the U.K., and 10X more than Germany. Mall visit declined 50% between 2010 and 2013 and the number keeps falling every year since according to the real-estate research firm.

The analysis at Cowen and Company described several reasons for the structural decay of shopping malls following the great recession. According to them, stagnant wages and increasing health-care issues squeezed consumers spending more on clothes and fun stuff. The Recession permanently hurt logo-driven brands that flourished during the 1990s and 2000s. As consumers look for discounts and bargains in every deal, many fashion outlets, club stores, discounters acquired market share from malls and department stores.

Rising Trend of Dining Out and Traveling

Dining Out and Traveling
Although many online stores and excess of shopping malls made thousands of retail shops to shut down, the meltdown is happening while wages for less-paying workers are increasing faster than ever.

Obviously, the growing wages rate is great for workers and the U.S. economy, but small businesses that rely on cheap workers like retail stores are greatly affecting with this increase. Recently, new less-paying laws and a tight job market have pushed up wages for the low-income workers, squeezing retailers who are already harried by Amazon.

Moreover, clothing stores are declining greatly as consumers are shifting their spending away from clothes toward traveling and dining out. Before the recession, consumers bought a lot of things – clothes, furniture, home accessories and more. But things have changed. Spending on outfits is down, by 20%.

What’s next? Travel is also booming and this is the reason hotel occupancy is flourishing. Last year U.S. airlines made a record, flown 823 million passengers.

The rise of restaurants is even more remarkable. Food services and drinking places have grown dramatically compared to another retail spending. America has started spending more money in restaurants and coffee shops than grocery stores.

Since department stores have failed badly, but better food options, entertainment places, and fitness options might bring families back to striving malls, where they might roam around brick-and-mortar stores that are at higher risk of closing.

To Sum Things Up

There is no doubt about that the most significant trend badly affecting shopping malls and brick-and-mortar departmental stores is the Amazon and other online retail companies. But the rising trend of dining out in restaurants, booming travel industry, mobile commerce, overbuilt of shopping malls are all the real reasons behind the recent recession of retail brands.


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