What is Driving the Death of Retail Stores?

In less than four months there have been as many retail closures this year than there was in all of the last year. Sports Authority and Payless have filed for bankruptcy, while Lululemon, Urban Outfitters, American Eagle, and Ralph Lauren have hit multi-year lows. A terrible crisis is sweeping through the retail industry causing mass destruction of profits and jobs. The full impact of this is frightening, and we’ve yet to see on how large a scale this is going to take place. But we should be prepared for the worst.

Yet, the economic situation of the United Sates doesn’t seem to indicate any problem that would be indicative of such a crisis. The GDP has been growing for the last eight years. In addition, gas prices have been low, and official unemployment has decreased to lower than 5 percent. Wage growth for the middle and lower-class has grown for the last eighteen months. Disposable income among Americans has been higher than it has in a while. Retail spending among Americans is increasing.

So what’s causing this increasing retail apocalypse?

The answer lies in several factors. There is no one single cause of this situation. It comes down to economics. People make decisions, those decisions have an economic effect which is not necessarily positive or negative, they simply are.  In economics there’s a term called “economic trend“, which means, “[t]he overall direction in which a nation’s economy is moving.” The collection of actions taken by people makes up what is known as the economy. An “economic trend” is the tendency among those choices. It’s important to understand this in order to understand what is happening with the retail sector. This situation is being caused by one particular trend:  retail purchases are being made increasingly online as opposed to in-store.

Online shopping has benefits that in-store shopping can’t have. Shopping online is easier, in that it requires less effort. One doesn’t even have to get up in order to do it. This follows the increasingly sedentary lifestyle of Americans. Online return policies are far superior to what they once were, particularly in the realm of books, music, and movies. The biggest aspect of all, I think, is the vastly increased product selection. Another huge aspect is that website ordering can give you access to the entire product line of a single manufacturer. Finally, the ability to compare different prices from different vendors. By using Amazon you can see the same product being offered by ten different sellers all with different prices. This ability to choose among competitors without having to visit multiple stores is a huge advantage over in-store retail.

People are choosing to purchase their retail goods online as a matter of convenience. They are no longer interested in the experience of going out to a mall and shopping. What was once a cultural phenomenon has become a chore that people are no longer interested in. People can visit a single website and find everything they’re looking for instead of walking around a mall for a significant portion of the day. This has primarily been accomplished by the online retailer Amazon. This company along has seen a quadrupling of sales between 2010 and 2016. North American Amazon sales have increased for $16 million annually to $80 million. Several reports even claim that half of all U.S. households are Amazon prime subscribers. This should by no means be limited to just Amazon. The online sales growth has grown all across the online retail sector. Casper, Bonobos, and Warby Parker have done quite well.

Online shopping has benefits that in-store shopping can’t have. Shopping online is easier, in that it requires less effort. One doesn’t even have to get up in order to do it. This follows the increasingly sedentary lifestyle of Americans. Online return policies are far superior to what they once were, particularly in the realm of books, music, and movies. The biggest aspect of all, I think, is the vastly increased product selection. Another huge aspect is that website ordering can give you access to the entire product line of a single manufacturer. Finally, the ability to compare different prices from different vendors. By using Amazon you can see the same product being offered by ten different sellers all with different prices. This ability to choose among competitors without having to visit multiple stores is a huge advantage over in-store retail.

The trend with consumers to choose the more convenient option. Retail shopping online has tremendous advantages that physical in-store shopping simply cannot offer. Sure, there is a certain charm and social aspect of going out with a group of people to “hit the stores” at the mall, but the desire to do so is waning in the face of superior convenience.

It must be acknowledged that this is not the result of choices made by the capitalist class. This is a result of the functioning of the market, the logic of capital. Not even the bourgeoisie are immune from its functioning. They too can, and are harmed by it. As these stores continue to close, the resulting unemployment will increase. This is not a problem that can be resolved by some kind of democratic reform. Nothing but a radical reorganisation of society along a revolutionary proletarian line can hope to tackle the contradictions of capitalism.

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