The Death, and Rebirth, of Shopping.

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I used to work as a salesman at a home appliance-furniture-electronics store, “American TV”. Those of you from the Midwest may have seen these places along highways and such. In February, American TV went out-of-business and by now has closed all of its stores. It is officially dead.

Earlier today, I googled the store’s name just to see the final news stories on the closure. I was interested to see one of my more favored blogs, the Economic Collapse blog, mention American TV in an article. In the article, the author discusses how the face of retail is changing, and how the apocalypse of malls and big-box retailers is upon us.

As the Economic Collapse Blog reports:

#1 As you read this article, approximately a billion square feet of retail space is sitting vacant in the United States.

#2 Last week, Radio Shack announced that it was going to close more than a thousand stores.

#3 Last week, Staples announced that it was going to close 225 stores.

#4 Same-store sales at Office Depot have declined for 13 quarters in a row.

#5 J.C. Penney has been dying for years, and it recently announced plans to close 33 more stores.

#6 J.C. Penney lost 586 million dollars during the second quarter of 2013 alone.

#7 Sears has closed about 300 stores since 2010, and CNN is reporting that Sears is “expected to shutter another 500 Sears and Kmart locations soon”.

#8 Overall, sales numbers have declined at Sears for 27 quarters in a row.

#9 Target has announced that it is going to eliminate 475 jobs and not fill 700 positions that are currently empty.

#10 It is being projected that Aéropostale will close about 175 stores over the next couple of years.

#11 Macy’s has announced that it is going to be closing five stores and eliminating 2,500 jobs.

#12 The Children’s Place has announced that it will be closing down 125 of its “weakest” stores by 2016.

#13 Best Buy recently shut down about 50 stores up in Canada.

#14 Video rental giant Blockbuster has completely shut down all of their stores.

#15 It is being projected that sales at U.S. supermarkets will decline by 1.7 percent this year even as the overall population continues to grow.

#16 McDonald’s has reported that sales at established U.S. locations were down 3.3 percent in January.

#17 A home appliance chain known as “American TV” in the Midwest is going to be shutting down all 11 stores.

#18 Even Wal-Mart is struggling right now. Just check out what one very prominent Wal-Mart executive recently admitted…

David Cheesewright, CEO of Walmart International was speaking at the same presentation, and he pointed out that Walmart would try to protect its market share in the US — where the company had just issued an earnings warning. But most of the growth would have to come from its units outside the US. I mean, via these share buybacks?

Alas, outside the US too, economies were limping along at best, and consumers were struggling and the operating environment was tough. “We’re seeing economies under stress pretty much everywhere we operate,” Cheesewright admitted.

#19 In a recent CNBC article entitled “Time to close Wal-Mart stores? Analysts think so”, it was recommended that Wal-Mart should close approximately 100 “underperforming” supercenters in rural locations across America.

#20 Retail consultant Howard Davidowitz is projecting that up to half of all shopping malls in America may shut down within the next 15 to 20 years…

The times, they are a’changin. The retail world is undergoing a radical shift. It looks like utter destruction. It is far from utter destruction, I can assure you.

Many of these retailers have been suffering for years anyway. Sears, J.C. Penney and Radioshack have been dying for nearly a decade. It will be no surprise when they die for good.

Why is this happening? The answer should be obvious to anyone who knows how to use a computer. Online shopping is killing storefront retail.

Case in point: I recently decided to buy a new iPad case. I turned on my computer. I got on Amazon. I searched for iPad cases, and I almost instantly found a well-reviewed case that I liked for $15. I bought it. The whole thing took me 5 minutes, tops. Furthermore, I have free two-day shipping through Amazon Prime. Two days later, the mailman brought it to my door. Easy as pie. Done, and done.

Alternatively, I could have driven to Walmart or Staples, the only big-box retailers nearby my house, and searched their inventory. Maybe I would have found something, maybe not. If I did see an iPad case I liked, I would have probably paid more for it at Walmart, and definitely more at Staples. I would have stood in line at the single manned register they ever seem to have open at these stores. I would have spent nearly a half hour or more, and at least a couple bucks more in gas. Granted, I could have had the case that day; but I didn’t need it that day. Why even bother?

Know this: Shopping malls are in huge trouble. Like the article mentions, expect shopping malls as we know them to largely die off. Why search for parking, walk through the lot in the freezing cold/boiling heat, hoof it around a mall (of which many are filled with juvenile hooligans, these days), maybe or maybe not find the item you want, and almost certainly pay more for it than you would online? Why, indeed. Clothes and accessory shopping will remain, and that’s about it. Even then, clothing stores will take a hit. I do not buy clothes often, but when I do, I buy about half of my clothes online.

This does not mean the malls will disappear. It’s the stores contained therein that will change. As less and less stores jockey for a mall storefront, mall management will have to lower rents. This will change that store content of the malls. I suspect they will become more service-oriented and boutiquey. They may still find business, but I do not think modern shopping malls will remain the shopping mecca we know them as today. I’m no business expert, but in my opinion, I think malls of the future will need to encourage their social aspects over the actual shopping. I think we’ll see more upscale outdoor malls with classy dining outfits and sitting areas, as opposed to huge indoor bunkers with run-of-the-mill retail crap.

Some people have already begun to decry online shopping as an abomination. Various states have already enacted an internet sales tax, as an attempt to begin combating the profitability of online sellers. Who do you think agitates for the online sales tax? Storefront retailers, that’s who. They understand everything that I have mentioned. They understand the gravity of their situation. Rather than find ways to improve their service or offer greater value, though, these retailers would rather punish consumers with an online sales tax. The free market favors those who best meet the needs of consumers; online retailers are increasingly becoming the better at meeting the needs of consumers. Storefront retailers will not stand for this. Damn that Free Market!

Some will decry the death of modern storefront retail and shopping malls as an affront to national prosperity, due to the jobs lost in their meltdown, and that the government needs to enact more laws favoring storefront retail. I understand that it sucks for people to lose their jobs, but that is a foolish point of view. Storefront retailers are losing to Online retailers for one major reason: Storefront retail costs far more to maintain. All the properties, employees, products on shelves, dealing with theft, destruction of merchandise, etc… practically none of this is an issue for online retailers, compared to big-box retailers.

At one time, big-box retail was the most efficient model. Now, online retail is giving big-box retail a run for it’s money. Why use the law to force capital to remain tied up in an inefficient retail model? It’s a huge waste. Let the big-box retailers go under. The capital tied up in these operations will be picked up by other entrepreneurs who will find an efficient use for it that meets consumers demands. As long as the state doesn’t muck things up with foolish legislation (which is often apt to happen), then entrepreneurs will pick up the slack.

The times, they are a’changin. In the realm of retail, they are not getting worse. They are getting better.

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