American retailers are closing thousands of stores and going bankrupt at a rate not seen since the recession, with thousands of workers losing their jobs in a “slow-rolling crisis” that is reportedly devastating the U.S. economy.
"This is creating a slow-rolling crisis," Business Insider cited Mark Cohen, the director of retail studies at Columbia Business School, as saying. "The people that work in retail stores will lose their jobs, then spend less money in retail stores because they are no longer employed. That creates a cascade of economic challenges."
Since October, about 89,000 workers in general merchandise stores have lost their jobs, which is more than the number of people employed in the entire U.S. coal industry, the New York Times reported.
Cohen explained that both coal miners and retail workers don't have a skill set of abilities that is easily transferable to another line of work.
“The retail industry, which employs about one out of every 10 American workers, typically pays low wages but provides employment to people in every age bracket, as well as those who are low-skilled and need flexible scheduling options,” Business Insider explained.
“So when these workers lose their jobs, they can have a hard time finding other employment,” BI reported.
"The coal miners are out of luck," Cohen told BI. "Retail workers are in the same boat," he said.
"Brick-and-mortar closings will continue to expand throughout the year," Cohen said. "There is no reason why they would abate."
E-commerce players, led by the industry giant Amazon, have made it so easy and fast for people to shop online that traditional retailers, shackled by fading real estate and a culture of selling in stores, are struggling to compete. This shift has been building gradually for years. But economists, retail workers and real estate investors say it appears that it has sped up in recent months, the Times explained.
Between 2010 and 2014, e-commerce grew by an average of $30 billion annually. Over the past three years, average annual growth has increased to $40 billion.
“That is the tipping point, right there,” said Barbara Denham, a senior economist at Reis, a real estate data and analytics firm. “It’s like the Doppler effect. The change is coming at you so fast, it feels like it is accelerating.”
“There is a sea change happening in the retail industry,” Cohen, a former executive at Sears, who now runs the retail studies program at Columbia Business School, told the Times. “And that is bringing a sea change in employment.”
To be sure, Steve Beaman, chairman the Society to Advance Financial Education, has told Newsmax TV that mass store closures and layoffs by Sears, Macy’s and Kmart only prove that the retail industry continues to undergo a sea change because of online shopping.
And this seismic shift may soon extinguish a cultural landmark of the recent past – the American shopping mall.
JD Hayworth asked Beaman on Newsmax TV's "America Talks Live" if malls are a relic of a bygone era.
“My personal opinion is they are,” he said. He cited many many requiring adults to chaperone those under the ages of 21 or 18.
“So we're already going to see the demise of it being the hang out for kids and I think that will change the retailing habits of it. The overall security concerns of the bricks-and-mortar retailers is going to become a draining cost on them. So, they're going to think more and more let's go to the internet,” he said.
From his viewpoint, Newsmax Finance Insider Jeff Snyder said the retail malaise just may be indicative of a deeper economic malady.
"When analyzing the shift in consumer preferences it is usually presented as “all or nothing,” meaning that shoppers leaving brick-and-mortar stores are bestowed with a convenience option that they are exercising," Snyder wrote for Newsmax Finance.
Instead, the shift toward online may not be separable from the “weak demand environment” at all. In other words, if consumers have become fickle about bargains and finding the lowest price, that may be just as much macro-economic as micro-economic.
It may be that online retailers are best positioned in a downward economic transition because they can offer better prices without having the burden of the huge sales distribution costs that come with operating physical stores.
That seems to be the judgment of the world’s producers as this “manufacturing recession” continues on and on.
(Newsmax wires services the Associated Press, Bloomberg and Reuters contributed to this report).
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