• 145 days Could Crypto Overtake Traditional Investment?
  • 150 days Americans Still Quitting Jobs At Record Pace
  • 152 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 155 days Is The Dollar Too Strong?
  • 155 days Big Tech Disappoints Investors on Earnings Calls
  • 156 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 157 days China Is Quietly Trying To Distance Itself From Russia
  • 158 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 162 days Crypto Investors Won Big In 2021
  • 162 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 163 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 165 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 166 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 169 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 170 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 170 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 172 days Are NFTs About To Take Over Gaming?
  • 173 days Europe’s Economy Is On The Brink As Putin’s War Escalates
  • 176 days What’s Causing Inflation In The United States?
  • 177 days Intel Joins Russian Exodus as Chip Shortage Digs In
World’s Richest Have Taken A $400B Wealth Cut Amid Ukraine Crisis

World’s Richest Have Taken A $400B Wealth Cut Amid Ukraine Crisis

According to the Bloomberg Billionaires…

Russia Considers Nationalizing Foreign Businesses

Russia Considers Nationalizing Foreign Businesses

The Russian government is reportedly…

Could Crypto Overtake Traditional Investment?

Could Crypto Overtake Traditional Investment?

Despite recent volatility, there is…

  1. Home
  2. News
  3. Breaking News

Only The Dollar Store Can Survive the E-Commerce Coup

Retail

The highest number of U.S. closures of major retail chains on record is 7,000 in 2008--the start of the financial crisis. So what gives now?

A decade later, it barely raised an eyebrow when some 8,000-retail stores closed their doors in 2017. And even that record was obliterated against last year, with this year on track to shatter yet another closure record.

So far this year, retailers have announced more than 6,100 store closures, but that number is expected to be even higher, according to Business Insider.

The numbers seem to suggest that this may be the beginning of the end for brick and mortar retail.

According to estimates from Cushman & Wakefield, retailers are expected to close roughly 9,000 stores this year, followed by another 12,000 stores in 2020.

Filling in the gap is … Amazon and to a lesser extent, its online retail rivals.

The e-commerce giant is expected to account nearly half of U.S. e-commerce sales by 2026.

Still, even when doors are closing at a record pace, online retail sales in the U.S. passed the $517-billion mark in 2018. That represents a 15-percent increase compared with 2017. The growth in retail sales in physical stores reached 3.7 percent last year, and e-commerce now accounts for 14.3 percent of total retail sales compared to the 5.1 percent a decade ago.

The numbers don’t seem to add up to such a dire state of affairs for brick-and-mortar retail. But while retail is expanding, online sales are expanding disproportionately more.

According to the recent analysis by UBS, each 1-percent increase in online penetration will lead to the closure of 8,000 to 8,500 physical retail stores.

The bottom line?

At the current rate, we could be looking at 75,000 store closures by 2026. That represents 7 percent of the American retail establishment.  

Related: Climbing Stocks Weigh On Gold, But A Turnaround May Be Near

UBS breaks it down even further, by retail category, and clothing and clothing accessory stores fare the worst: Estimates are that of those predicted 75,000 closures, 20,700 will be clothing stores, followed by a predicted 9,800 closures for consumer electronics stores, 84,00 for furniture stores and 5,900 for sporting goods.

And it’s not just about closing a few doors because retailers have too many locations: It’s increasingly about brick-and-mortar bankruptcy.

Among the chains to have already declared bankruptcy this year are Wet Seal, The Limited, MC Sports, Bob’s Sporting Goods/, BCBG Max Azria, Payless ShoeSource…

Gymboree and rue21 are also reportedly close to filing for bankruptcy, and there are at least a dozen other retailers on watchlists.

One type of retail that’s bucking the trend and defying the downward pull of gravity is the dollar chain--Dollar General, the Dollar Store, etc. These aren’t going anywhere. In fact, while others are closing their doors, these “dollar” chains have managed to add more than 7,000 retail spaces in the past five years. Dollar General, for one, is planning to open 975 stores this year alone.

Data also shows that the restaurant sector doesn’t seem to be haunted by the digital trends, The U.S. has averaged well over 24,000 new restaurants annually for each of the last six years.

But the food industry is working hard to collaborate with online businesses. The online food delivery market is expected to grow from $35 billion globally today to $365 billion by 2030.

Hundreds of thousands of retail workers have lost their jobs over the last decade amid record-high store closures, bankruptcies, and liquidations. According to Labor Department data, since 2017, retail has shed more than 140,000 jobs. In March alone, the sector added another 11,000 jobs to that loss sheet.

By Michael Kern for Safehaven.com

More Top Reads From Safehaven.com

Back to homepage

Leave a comment

Leave a comment