Our readers will know that our last monthly article was the first in a two part series about the challenges facing traditional retail. The first article generally focused on the scale of the problem while the second article will focus on options that retails have to avoid decline, obsolescence, and bankruptcy. So, any news that detailed the size of the problem might get dropped from inclusion in our monthly articles, but that doesn’t mean the bad news has stopped. In fact, despite cheap borrowing and high employment, consumers aren’t spending their money at brick-and-mortar stores like they used to. The traditional retail environment still has to shed a lot of underutilized real estate until it reaches parity with actual spending trends.
How much damage is there yet to go? NBC reports that 1000 stores closed last week alone. Credit Suisse put out a report last week suggesting 20% to 25% of malls will close within 5 years and they currently estimate a record 8600 stores will close this year – a new record. That’s a lot of creative destruction for a single week.