One thing has been made very clear in the United States these past years: it’s that the nature of American consumerism has been undergoing a massive shift in its very nature. At first glance it’s easy to reach the assumption that people no longer want to spend much of anything anymore. But the truth is, consumers have simply altered their habits. But these changes have some indelible effects in the retail market’s traditional form.
The worst hit according to the New York Times has been the legacy stores, those who bear the biggest and most illustrious brands in retailing. Case in point: Macy’s, known as America’s largest department store. Last Thursday August 11 it announced that it was closing 100 of its stores across the country. Another example is Wal-Mart, the largest retailer in the world, which took a direct recourse in bolstering its online sales growth by acquiring a small online competitor for over $3 billion.
And therein lay the biggest threat to old school retailing: online retailing. Department stores in the real world are steadily losing ground to the king, or perhaps god, worshipped by online shoppers, Amazon. This was foremost in Wal-Mart’s concerns when it made the $3 billion deal to buy up the Jet.com e-commerce startup. It’s upsetting for retailers to see their usual crowds preferring to shop online from home, and some of them have taken high-risk steps in offering big discounts for their goods to increase sales but lower earnings.
Already, some one prominent retailers have called it quits like Aeropostale, Pacific Sunwear and Sports Authority while stalwarts like Macy’s, Sears and JCPenney are forced to hunker down by closing branches (to increase the locations’ value as real estate properties) and transferring people from those stores to the ones they want to salvage. The ones who find no place in the reshuffle, unfortunately, get laid off. In this year alone Challenger, Gray & Christmas, a job placement firm catering to retailers, have figured that up to 44,000 employees of closing retail stores are going to be downsized by their companies. Only the energy and computers sectors, I comparison to retail, have cut more jobs and people.
Mark Cohen, professor and director of retail studies at Columbia Business School, says that this sorry pass in retailing came to be because there were too many stores branches built by retailers, far more than what existing consumers actually needed, and at the onset of the rise of online retail to boot.
And with the economy as a whole moving slower than molasses, the consumers are more interested in bargains than ever before.
Not all retailers are suffering however. Stores like Home Depot are actually keeping quite busy with the sudden influx of costumers. It seems these consumers are less interested in buying new clothes or gadgets, and more fascinated with home repairs and makeovers.
Really, retailers can only hope to catch the latest consumer trend and hope to catch up.
Photo Credit to alchemygp.com