Retail Apocalypse: Why Are Major Retail Chains All Over America Collapsing?

By Michael, on February 17th, 2013, The Economic Collapse Blog

If the economy is improving, then why are many of the largest retail chains in America closing hundreds of stores? When I was growing up, Sears, J.C. Penney, Best Buy and RadioShack were all considered to be unstoppable retail powerhouses. But now it is being projected that all of them will close hundreds of stores before the end of 2013. Even Wal-Mart is running into problems. A recent internal Wal-Mart memo that was leaked to Bloomberg described February sales as a "total disaster". So why is this happening? Why are major retail chains all over America collapsing? Is the "retail apocalypse" upon us? Well, the truth is that this is just another sign that the U.S. economy is falling apart right in front of our eyes. Incomes are declining, taxes are going up, government dependence is at an all-time high, and according to the Bureau of Labor Statistics the percentage of the U.S. labor force that is employed has been steadily falling since 2006. The top 10% of all income earners in the U.S. are still doing very well, but most U.S. consumers are either flat broke or are drowning in debt. The large disposable incomes that the big retail chains have depended upon in the past simply are not there anymore. So retail chains all over the United States are now closing up unprofitable stores. This is especially true in low income areas.

When you step back and take a look at the bigger picture, the rapid decline of some of our largest retail chains really is stunning.

It is happening already in some areas, but soon half empty malls and boarded up storefronts will litter the landscapes of cities all over America.

Just check out some of these store closing numbers for 2013. These numbers are from a recent Yahoo Finance article...

Please refer to the article link for the remaining details and the retail chain announcements of store closures.

Yeah, so why are so many retail chains closing across the United States, even though a lot of media report an improving economy? Frankly I think it is outright lies that merits public disgust. The lies are a final attempt beyond failing fiscal and monetary policy to spur confidence to try and get businesses hiring again and people spending, but the collapse continues. Knowing this, you'd have to feel some level of disdain toward the media and those polyanna journalists who even try to tell you things are okay, much less going great.

Similar lies are coming out of the G20 meeting about the global currency wars, trying to downplay what is a potentially devastating monetary development as it were back in the 1930s. Some smaller media actually do publish warnings on concerns about these types of damaging policies, but political and finance leaders abroad continue to downplay such concerns or even dismiss them, right in front of everyone's nose. Sure, the intention may not be to inflict damage to another economy, but the desperate protectionist attempt to save one's economic butt is compelling testimony to the growing desperation to reinvigorate local economic growth.

With all these stores closing or due to close, it is obvious something is very sick with the world's biggest economy. But the markets and various analysts and journalists are too drunk on the strong wine that is quantitative easing and monetary stimulus, failing to realize, or at least openly acknowledge the truth of this globally unsustainable policy.

The Emperors fiddle while Rome burns.

Same here in the UK. I would say the 2 main factors are people are shopping online or have no money to shop at all.

Capitalism necessitates growth. Where there isn't growth, there isn't investment. Where there isn't investment, cuts are made. The ones that make the largest cuts are those with the most to lose.

Having worked directly in retail and subsequently in retail marketing (here in the UK), I think that the current economic crisis has simply escalated fundamental flaws in the traditional retail model and that the length of the recession has simply brought many retailers to zero point.

The actual model of selling employed in physical retail isn't dramatically different to that of 50 years ago, but the economic and business climate that it operates in is. In the past stores focused on selling fewer items for bigger profit margins, whereas cheap manufacturing has changed most failing chains to a mentality of 'pile it high, sell it cheap'. You'll notice premium stores rarely go out of business.

This all worked fine until the internet came along, piling higher and selling cheaper due to it's retail space savings. The sad truth is, many physical stores have become 'showrooms' for online competitors. People 'shop' in person, examine items of interest, then go home and find the best price online.

The future of retail on the high street is for stores to become showrooms, with only one or two of each product in the store. Without the need for warehousing, the customer will pay in-store for delivery at home. Why would you keep 20 fridges out the back when you'll be delivering it anyway? I suspect you'll see big online retailers developing retail showrooms too.

None of this is anyone's fault, it's just that the internet is such a huge gamechanger than many, many stores simply haven't been able to adapt in the short time they've had to incorporate such a fundamental change. The recession has simply hastened the inevitable in many cases.

A couple of you raise a good point that merits consideration. Yep the internet has changed the retail landscape to such an extent that those retailers who fail to adapt will sink. It was happening here in Australia with the likes of Harvey Norman and others, who as I understand, has now started trading online. You'd think large stores would have made the necessary adaptations earlier, but anyway.

Still doesn't bode well for the economy because if there are less people required to stock and manage inventories, sell to people in stores, and other positions no longer required, this would mean fewer people have jobs and fewer people spending in the economy having reduce discretionary income if they are not employed.

Originally posted by surrealist
Yep the internet has changed the retail landscape to such an extent that those retailers who fail to adapt will sink.

Exactly right.

As someone said the other day on TV, HMV here in the UK has become more of a "viewing gallery" for music and other media. You go in, have a look at whats out there, then go online and get it cheaper.

If you keep your prices higher than a competitor, kind of makes sense that you'll suffer at some point.

We have a lovely little village book shop here where i live, i've used it for years. However when they are charging triple the price of something i can get on Amazon, i can't always shop there.

I guess the greedy councils who set the lease rates have a lot to do with it too.

Here in the UK i envisage a time when it's just coffee shops and charity shops.

CX.

I dont know about the US, but I can buy something online for 25-30% cheaper than at my local shop.

At a time when the economy is in a pinch, why would consumers be willing to pay high prices just so a companies bottom line is high?

So company X made $200million last year, yet complains its consumers are going online.

here's an idea, stop ripping us off you stupid fools!

According to our current administration, our economy is 'recovering'.......if you want to drink the koolaid, go right ahead. I'll pass thank you very much......

It is scary to see the big chain stores having to close some stores, which in turns costs more jobs.
Although it seems that on-line shopping seems to be okay....
Wonder if more people are staying at home, purchasing products over the internet instead of going to the retail stores themselves.

However, that being said, if Wally World is showing a loss, well that indeed is a sign of hard times ahead.

Online shopping, mega-stores (i.e. Walmart, Target), and a suffering middle and lower class are the reason why retail chains are failing. Amazon has been the death the many franchises.

reply to post by Agit8dChop


Question about your online shopping: What do you pay for shipping, or is that included in the checkout price?

Sure, saving a few bucks here and there is great, but if I need to pay extra for shipping, or ship from 3-4 different places when I could buy everything in one shopping excursion, which is really better?

reply to post by DaTroof


When I buy something at Amazon for example it usually arrives a day or two later.

From 10 bucks upwards the shipping is free ( When delivering through Amazon )

I don't need no friggin' superstores, and many people not either I guess.

So that's why they close all these stores.

reply to post by DaTroof


yep, with shipping on top im still 20-25% cheaper.

Example, sun glasses

1. Bolle sunglasses $82.00 + ($20ish shipping)

any shop here in Australia has the same glasses for ATLEAST $159.00

How about computer parts?

simple asus motherboard at my local IT Shop, $149.

Online, $89 + $15 shipping.


There are times i need something quick, maybe 1-2 days. So, ill still buy it online, but search the internet for an Australian dealer. I normally find it for 10% cheaper than a shop.

but there are times when you need something now, like right now. Like Condoms, Vodka, toilet paper and/or nose hair clippers.

Very interesting ideas many are putting forth here, i often see the
parallel between online shopping changing retail to mechanization
changing factory jobs, in the end it may well cost us millions of
jobs overall that will never be replaced by humans.......

The world out of sheer greed may have to change the way it
looks at humans in the work place once again. interesting
times we are living in.

I manage a retail store here in Australia and I say that with fair confidence that China and beligerent capitalism is behind all of the corporate retail collapse.

There is a multitude of companies and factories that were set up in China by greedy corporate profiteers in order to sell lower quality products at the same retail price but with a far lower cost price than locally made goods here in the West. This was all done in the pursuit of profit and worked wonderfully in the 90's and early 2000's. But now the tables have been turned on those racketeers who shamelessly put millions of westerners out of work in the name of return on investment.

The advent of online webstores now mean that the factories can sell directly to the customer and cut the throat of the retailers that set them up in business in the first place.

I have done a lot of research about my sector of retail online and the factories (same supplier names as we use) are selling at a price higher than we pay as retailers for the goods, but a lot cheaper than we retail them for. There is as a direct result a growing trend of customers using retail stores in order to gauge the look and feel of a product and then going home to order the product online from these suppliers.

China has taken upon itself to flood the world market with cheaply made products and the biggest crime of all here is that nobody is really noticing that what is actually happening. China is slowly but surely eroding our collective independence here in the West by shutting down our manufacturing operations one by one i.e. she is making us reliant upon her.

Just imagine what could and would happen if China were to go war with the USA - 95% of the every day things we use are made there. We have virtually no factories left to satisfy demand locally and most western countries could not afford to build and reopen them. So everything we take for granted from Electronic goods, to homewares, to books to the cars we drive would suddenly become in very very short supply.

This is the great unspoken conspiracy of our time and nobody lifts a finger to do anything about it. China does not need to go to war to take over the world - it is simply buying it one small transaction at a time and we are the ones bringing the apocalypse down on our heads every single time we choose a Chinese made product.

Originally posted by surrealist ...
The Emperors fiddle while Rome burns.

I disagree. I don't think that the emperors are fiddling. I believe that they are stoking the fires and fanning the flames.

I feel certain that an agenda is being carried out. The b.s. that we are fed by government and media is not an attempt to restore confidence, but to distract, obfuscate, and divide.

This train is being driven hard and fast on a crash course.

yeah online shopping is the way to go. i do %90 of my shopping online, everything from big screen T.V. to apple trees I have bought online.
Online items are cheaper even with the shipping charges, it saves me time and money it`s not just the price of the item but the cost of gas for a 80 mile round trip to the store and back.
You can`t beat shopping in the comfort of your own home and then have it delivered right to your door.

Ross Perot warned us that this was coming back in the 1990s. Everybody called him a lunatic, but here we are. You cannot have "free trade" with a "slave wage" nation unless you want to pay your people "slave wages".

reply to post by Tardacus


We have prime. It's 70.00 a year but you get the video streaming with that and we watch some stuff from that too, and I have a Kindle so it gives me a free book a month. I read the whole Hunger Games series like that. Most importantly, if something is marked PRIME eligible, it's shipped free. And a lot of times shipping is cheaper than gas- like when I ordered a shirt pattern. It was about 5.99. It was on sale for 1.99 across town, but it would have been over 5.00 in gas to go get it, and time, and probably lunch out...

So we order stuff that you might not even think about. Like I got 2 pounds of chili powder that was really good for less than I'd pay for 2-3 ounces. I get a LOT of herbs and spices like that.

We don't have any money. It would be easier to buy like this one herb that I take in bottles just at the store, but I can buy 2 pounds of the stuff and empty capsules for what I'd pay for 1 bottle. So since I am broke, I make my own.

We fix everything we can, make everything we can. It would be SO MUCH better to be able to afford someone else to do it, but there's just hardly enough money to keep a roof over our heads and pay our bills. There's not much left to spend.

reply to post by Tardacus


Anyone see gasoline prices? And they're going to get worse. Better to stay at home and spend your oil money heating your home.

The next thing that will happen (I hope) is that people will stop spending the ridiculous amount of money to get a 4 year college degree. On-line education, and starve the beast of the union college professors - who don't even bother teaching a class.

Wow...you mean people are actually watching the money they have, instead of recklessly spending and buying junk they don't need ?

Hmm, perhaps people are spending more money in other stores, higher end items that actually MIGHT last too.

I find nothing I want to buy in Walmart, and not much in Sears.