Retail Apocalypse or Retail Reinvention?
August 9, 2017 | By Jeff Ketner
Instead, it’s the narrative of the “retail apocalypse” that has dominated media coverage of the retail industry this year. The term picked up steam in early 2017 amid reports of large numbers of store closings, and yes, legacy retailers and chronic underperformers including Sears, Radio Shack, Kmart, JCP and many others have announced massive store closings.
It is true that some malls and retailers are experiencing a world of hurt. As Sageberry Consulting’s Steve Dennis says, though, “regional malls — and their department store anchors – have been on the decline for more than two decades.” In many cases, the result of massive overbuilding and speculation – adding that “many dying malls are being killed by other malls” in faster-growing areas.
The real news story is that retail sales are up 4% year over year (and they are) and, simply put, the retail industry isn’t dying!
According to the NRF, retail sales increased 4.1% in the first quarter of 2017 compared to 2016, as our analyst friends Paula Rosenblum and Greg Buzek point out. In Buzek’s words, “we have a $4 trillion industry that is growing at a rate of over 4% year to year – that’s nearly $100 billion in growth in 5 months…And somehow this is bad news?” This latest growth isn’t an outlier, either; retail sales have grown nearly 4% annually for the past seven years!
Retail employment is also up, hardly the thing you’d expect in an apocalypse. In fact, retail jobs have grown by 1.5 million since early 2010, so store closings and layoffs haven’t dented retail’s overall upward trajectory. Store openings are on pace to surpass store closings this year, too. Buzek’s research firm, IHL Group, says the retail industry will see a net gain of 4,000 stores this year – again, not the sign of an industry in decline.
Need more proof? As CNBC reports, “there are more leaders than laggards in retail today, according to Moody Investment Services. Dollar stores, home-improvement chains, convenience stores and auto-parts retailers are among the leaders…off-price retailers, supermarkets and office-supply chains are also reporting more growth lately.”
We’re not in the midst of a retail apocalypse. Instead, we’re seeing retail reinvention with exciting new concepts and brands (TreeHouse, B8ta, TOMS, Warby Parker), new entrants in the U.S. market (Lidl and Aldi have taken the U.S. grocery industry by storm), continued disruption by ecommerce players, and bold moves by the giants of the industry, Walmart and Amazon. Amazon just placed the biggest bet of its life with its acquisition of Whole Foods – does anyone think Amazon is buying into the myth of the retail apocalypse and the death of physical stores?
As always, the real story is much more exciting than the fake news. And it’s good to see so many people setting the record straight about the retail industry.