If the U.S. economy is doing just fine, why have we already shattered the all-time record for retail store closings in a single year? Whenever I write about our “retail apocalypse”, many try to counter my arguments by pointing out the growing dominance of Amazon. And I certainly can’t deny that online shopping is on the rise, but it still accounts for less than 10 percent of total U.S. retail sales. No, something bigger is happening in our economy, and it isn’t receiving nearly enough attention from the mainstream media.
Back in 2008, a plummeting economy absolutely devastated retailers and it resulted in an all-time record of 6,163 retail stores being closed that year.
So far in 2017, over 6,700 stores have been shut down and we still have nearly two months to go! The following comes from CNN…
More store closings have been announced in 2017 than any other year on record.
Since January 1, retailers have announced plans to shutter more than 6,700 stores in the U.S., according to Fung Global Retail & Technology, a retail think tank.
That beats the previous all-time high of 6,163 store closings, which hit in 2008 amid the financial meltdown, according to Credit Suisse (CS).
Just within the last week, we have learned that Sears is closing down another 60 stores, and Walgreens announced that it intends to close approximately 600 locations.
Housing prices are soaring here thanks to the tech industry, but the boom comes with a consequence: A surge in homelessness marked by 400 unauthorized tent camps in parks, under bridges, on freeway medians and along busy sidewalks. The liberal city is trying to figure out what to do.
But I thought that the Seattle economy was doing so well.
San Diego now scrubs its sidewalks with bleach to counter a deadly hepatitis A outbreak. In Anaheim, 400 people sleep along a bike path in the shadow of Angel Stadium. Organizers in Portland lit incense at an outdoor food festival to cover up the stench of urine in a parking lot where vendors set up shop.
Not even during the worst parts of the last recession did things ever get this bad for the U.S. retail industry. As you will see in this article, more than 300 retailers have already filed for bankruptcy in 2017, and it is being projected that a staggering 8,640 stores will close in America by the end of this calendar year. That would shatter the old record by more than 20 percent. Sadly, our ongoing retail apocalypse appears to only be in the early chapters. One report recently estimated that up to 25 percent of all shopping malls in the country could shut down by 2022 due to the current woes of the retail industry. And if the new financial crisis that is already hitting Europe starts spreading over here, the numbers that I just shared with you could ultimately turn out to be a whole lot worse.
I knew that a lot of retailers were filing for bankruptcy, but I had no idea that the grand total for this year was already in the hundreds. According to CNN, the number of retail bankruptcies is now up 31 percent compared to the same time period last year…
Bankruptcies continue to pile up in the retail industry.
More than 300 retailers have filed for bankruptcy so far this year, according to data from BankruptcyData.com. That’s up 31% from the same time last year. Most of those filings were for small companies — the proverbial Mom & Pop store with a single location. But there are also plenty of household names on the list.
Yes, the growth of online retailers such as Amazon is fueling some of this, but the Internet has been around for several decades now.
So why are retail store closings and retail bankruptcies surging so dramatically all of a sudden?
Just a few days ago, another major victim of the retail apocalypse made headlines all over the nation when it filed for bankruptcy. At one time Gymboree was absolutely thriving, but now it is in a desperate fight to survive…
Children’s clothing chain Gymboree has filed for bankruptcy protection, aiming to slash its debts and close hundreds of stores amid crushing pressure on retailers.
Gymboree said it plans to remain in business but will close 375 to 450 of its 1,281 stores in filing for a Chapter 11 bankruptcy reorganization. Gymboree employs more than 11,000 people, including 10,500 hourly workers.
This hemorrhaging of retail jobs comes on the heels of last week’s mass layoffs at Hudson Bay Company, where employees from Saks Fifth Avenue and Lord & Taylor were among the 2,000 people laid off. The news of HBC layoffs came on the same day that Ascena, the parent company of brands like Ann Taylor, Lane Bryant, and Dress Barn, told investors it will be closing up to 650 stores (although it did not specify which brands will be affected just yet). Only two weeks ago, affordable luxury brand Michael Kors announced it too would close 125 stores to combat brand overexposure and plummeting sales.
In a lot of ways this reminds me of 2007. The stock market was still performing very well, but the real economy was starting to come apart at the seams.
And without a doubt, the real economy is really hurting right now. According to Business Insider, Moody’s is warning that 22 more major retailers may be forced to declare bankruptcy in the very near future…
Twenty-two retailers in Moody’s portfolio are in serious financial trouble that could lead to bankruptcy, according to a Moody’s note published on Wednesday. That’s 16% of the 148 companies in the financial firm’s retail group — eclipsing the level of seriously distressed retail companies that Moody’s reported during the Great Recession.
You can find the full list right here. If this many major retailers are “distressed” now, what are things going to look like once the financial markets start crashing?
As thousands of stores close down all across the United States, this is going to put an incredible amount of stress on shopping mall owners. In order to meet their financial obligations, those mall owners need tenants, but now the number of potential tenants is shrinking rapidly.
I have talked about dead malls before, but apparently what we have seen so far is nothing compared to what is coming. The following comes from CNN…
Store closings and even dead malls are nothing new, but things might be about to get a whole lot worse.
Between 20% and 25% of American malls will close within five years, according to a new report out this week from Credit Suisse. That kind of plunge would be unprecedented in the nation’s history.
I can’t even imagine what this country is going to look like if a quarter of our shopping malls shut down within the next five years. Already, there are some parts of the U.S. that look like a third world nation.
And what is this going to do to employment? Today, the retail industry employs millions upon millions of Americans, and those jobs could start disappearing very rapidly…
The retail sales associate is one of the most popular jobs in the country, with roughly 4.5 million Americans filling the occupation. In May, the US Bureau of Labor Statistics released data that found that 7.5 million retail jobs might be replaced by technology. The World Economic Forum predicts 30 to 50 percent of retail jobs will be gone once struggling companies like Gymboree fully hop on the digital train. MarketWatch found that over the last year, the department store space bled 29,900 jobs, while general merchandising stores cut 15,700 positions. At this rate, one Florida columnist put it soberingly, “Half of all US retail jobs could vanish. Just as ATMs replaced many bank tellers, automated check-out stations are supplanting retail clerks.”
At this moment, the number of working age Americans that do not have a job is hovering near a record high. So being able to at least get a job in the retail industry has been a real lifeline for many Americans, and now that lifeline may be in grave danger.
For those running our big corporations, losing these kinds of jobs is not a big deal. In fact, many corporate executives would be quite happy to replace all of their U.S. employees with technology or with foreign workers.
But if the middle class is going to survive, we need an economy that produces good paying jobs. Unfortunately, even poor paying retail jobs are starting to disappear now, and the future of the middle class is looking bleaker than it ever has before.
If you didn’t know better, you might be tempted to think that “Space Available” was the hottest new retail chain in the entire country. As you will see below, it is being projected that about a third of all shopping malls in the United States will soon close, and we just recently learned that the number of “distressed retailers” is the highest that it has been since the last recession. Honestly, I don’t know how anyone can possibly believe that the U.S. economy is in “good shape” after looking at the retail industry. In my recent article about the ongoing “retail apocalypse“, I discussed the fact that Sears, J.C. Penney and Macy’s have all announced that they are closing dozens of stores in 2017, and you can find a pretty comprehensive list of 19 U.S. retailers that are “on the brink of bankruptcy” right here. Needless to say, quite a bloodbath is going on out there right now.
But I didn’t realize how truly horrific things were for the retail industry until I came across an article about mall closings on Time Magazine’s website…
About one-third of malls in the U.S. will shut their doors in the coming years, retail analyst Jan Kniffen told CNBC Thursday. His prediction comes in the wake of Macy’s reporting its worst consecutive same-store sales decline since the financial crisis.
Macy’s and its fellow retailers in American malls are challenged by an oversupply of retail space as customers migrate toward online shopping, as well as fast fashion retailers like H&M and off-price stores such as T.J. Maxx. As a result, about 400 of the country’s 1,100 enclosed malls will fail in the upcoming years. Of those that remain, he predicts that about 250 will thrive and the rest will continue to struggle.
Can you imagine what this country is going to look like if that actually happens?
Shopping malls all over the United States are literally becoming “ghost towns”, and many that have already closed have stayed empty for years and years.
The process usually starts when a shopping mall starts losing anchor stores. That is why it is so alarming that Sears, J.C. Penney and Macy’s are planning to shut down so many locations in 2017. According to one recent report, 310 shopping malls in America are in imminent danger of losing an anchor store…
Dozens of malls have closed in the last 10 years, and many more are at risk of shutting down as retailers like Macy’s, JCPenney, and Sears — also known as anchor stores — shutter hundreds of stores to staunch the bleeding from falling sales.
The commercial-real-estate firm CoStar estimates that nearly a quarter of malls in the US, or roughly 310 of the nation’s 1,300 shopping malls, are at high risk of losing an anchor store.
Once the anchor stores start going, traffic falls off dramatically for the other stores and they start leaving too.
Four years ago in “The Beginning Of The End” I warned that empty storefronts would soon litter the national landscape, and now that is precisely what is happening.
Now that the Christmas season is over, some retailers that have been around for decades have suddenly decided that it is time to file for bankruptcy. Sadly, one of those retailers is HHGregg…
HHGregg Inc., the 61-year-old seller of appliances and electronics, is moving closer to Chapter 11 after announcing a store-closing plan, according to people with knowledge of the matter.
The filing may come as soon as next week, said the people, who asked not to be identified because the matter isn’t public. Bloomberg previously reported that HHGregg might file for bankruptcy in March if it couldn’t reach an out-of-court solution.
Another retailer that was once riding high but is now dealing with bankruptcy is BCBG…
BCBG, the California-based fashion retailer that had acquired fashion design firm Herve Leger in 1998, and that once had more than 570 boutiques globally, including 175 in the US, and whose cocktail dresses and handbags were shown off by celebrities, filed for bankruptcy on Wednesday.
It is buckling under $459 million of debt. It has 4,800 employees. Layoffs have already started. More layoffs and other cost cuts are planned, according to court documents, cited by Bloomberg. It started closing 120 of its stores in January. It wants to sell itself at a court-supervised auction. If that fails, it wants to negotiate a debt-for-equity swap with junior lenders owed $289 million.
If the U.S. economy was actually doing as well as the stock market says that it should be doing, all of these retail chains would not be closing stores and going bankrupt.
We live at a time when middle class consumers are tapped out. According to one recent survey, 57 percent of all Americans do not even have enough money in the bank to write a $500 check for an unexpected expense.
And people are falling out of the middle class at a staggering pace. The number of homeless people in New York City recently set a brand new record high, and city authorities plan to construct 90 new homeless shelters within the next five years.
On the west coast we are also seeing a dramatic rise in homelessness. The following comes from an article by Dan Lyman…
Citizen journalists have captured stunning images and video of homeless encampments that are spiraling out of control in the shadows of Disneyland and Anaheim Stadium in California.
The tent city has recently sprung up along the Santa Ana riverbed, near a busy convergence of three major California highways known as the “Orange Crush,” at the border of Anaheim and Santa Ana, the latter a “sanctuary city.”
Homeless activists estimate that as many as 1,000 people are camped in the region.
You can see some video footage of this homeless encampment on YouTube right here…
Incredibly, the Federal Reserve is almost certainly going to raise interest rates at their next meeting even though the U.S. economy is faltering so badly. That only makes sense if they are trying to make Donald Trump look as bad as possible.
Even though this giant bubble of false economic stability that we are currently enjoying has lasted far longer than it should have, the truth is that nothing has changed about the long-term economic outlook at all.
America is still heading for “economic Armageddon”, and the retail industry is a huge red flag that is warning us that our day of reckoning is approaching more rapidly than many had anticipated.