The Retail Meltdown

While being just over three months into 2017, there have been nine retail bankruptcies. What’s causing the meltdown? The Atlantic’s Derek Thompson has three reasons. The first is that people are shifting to buying online instead of in store. Apparel is now the largest e-commerce category, thanks to lower prices and easy return policies. The second reason is that America built too many malls. The number of malls grew twice as fast as the population during the last forty years. But recently, mall shopping has declined by 50%. Anchor stores like Macy’s, Sears and JC Penney are closing, causing other mall stores to close. The third reason Thompson provides is that Americans are shifting spending habits. Overall, spending on clothes is declining and being replaced with eating out and traveling. “Laugh if you want, but these sorts of questions—‘what experience will reliably deliver the most popular Instagram post?’—really drive the behavior of people ages 13 and up,” says Thompson. Today’s consumers are more willing to spend money on experiences than clothes. (The Atlantic, 4.10.17)