Retailing, as we have known it, is failing throughout the United States – throughout the world. Delinquencies, even bankruptcies are not just a Minneapolis phenomenon; even before Covid 19 affected every aspect of our lives, the world of personal, on-site retailing was failing. There are some obvious reasons for this failure and some not so obvious.
The online shopping phenomenon is the primary reason that on-site, personal shopping is failing. When identical products are available at competitive prices often with free prompt delivery often with attractive return programs and not requiring customers to battle traffic, weather, and parking inconveniences – why not buy online? Although some shoppers want to touch and feel the merchandise, return policies usually overcome that concern.
A less obvious explanation for the failure of on site shopping in shopping centers and street front shops is that this mode of shopping has been the primary and important part of the lifestyle of “Middle Americans.” To the extent that the cost of living – food costs, housing, health care, education, travel etc., are increasing more rapidly than the increase of incomes – the result is that more and more people have less to spend on discretionary spending in retail shops. Since many “middle Americans” are struggling financially, they are spending less of their discretionary funds at the retail counter.
There is also a fundamental life style change affecting the retail world.
- Casual living has become the norm; extensive and expensive wardrobes are becoming, passe. As a result Goodwill Stores (and others offering inexpensive, almost new goods), and Dollar General (and others) offering casual and moderately priced merchandise have become very popular and successful financially.
- Customers are increasingly choosing to rent rather than buy whenever possible – everything from automobiles, houses – even clothes!
- Lest we forget, the environment has become a deciding factor in what and when many people purchase – almost everything – and this will surely increase.
All of the above factors do not bode well for the retail industry – in particular, on-site retailing. Retailing as we have known it, is risky. As stores close, shopping centers can no longer survive financially – and are shutting down all over the United States. The result is many fewer retail opportunities.
Another important victim of the failure of on-site retailing is the widespread failure of first floor retailing, that many municipalities are requiring in new multi-family and office developments. Lacking tenants, the retail spaces remain vacant. What an urban eyesore! I will address this eyesore in a future blog.
It is difficult to be optimistic about an industry, traditional retailing, that is failing, in the form that currently exists.