Saturday, March 11, 2017

Store Closures: Coming to Retailers Near You

At the end of February, the credit rating service, Moody's, announced that the number of credit-stressed retailers has tripled since the end of the Great Recession of 2009.  Further, based on the current trend, Moody's expects a record number of these distressed retailers to close within 5 years; assuming they don't close before that.

The explosion of retailers shutting their doors began in 2015.  Thousands of big-name stores hit the skids starting with the bankruptcy of Radio Shack and the closure of nearly 1800 other locations..  Some claim that the retail closures are a result of the fact that there is just too much retail space in the U.S..  In fact, there is 7 feet by 7 feet of retail space (50 square feet) for every man, woman, and child in the country.  Other factors are the Internet. Sites such as Amazon are killing the traditional brick and mortar stores.  But, that doesn't necessarily explain why McDonald's was forced to close 700 stores in 2015.  I personally believe that people's wages have suffered, and as a result, discretionary spending is a major problem.

Whatever the cause, retailers shutting their doors means a loss of jobs.  It also means a loss of economic growth, which is primarily based on consumer spending.  That could mean that we are heading to another recession in the not-too-distant future. Of course, that assumption is based on the fact that the number of distressed retailers isn't just a trend, but instead, the canary in the coal mine for the economy.  It's only early March 2017, and already 13 major retailers have announced the closure of 1500 stores.  Both Macy's and Sears/K-Mart are on death watch.  And don't be shocked if more find themselves in a similar situation.

In my opinion, the situation is serious for both jobs and the economy. and can't be rectified unless or until wages start growing again.  Note my blog entry "Can Trump Make Wages Great Again?" as referenced below. 

Moody's: Moody's: Number of distressed US retailers triples since the Great Depression Recession; debt levels up:

Number of distressed U.S. retailers at highest level since Great Recession:

Store closings are the hottest trend in retail:

All 2015 Store Closings - Stores Closed by U.S. Retail Industry Chains:

These 13 retailers are closing more than 1,500 stores in 2017:

Why are Macy's and Sears in distress? - The Washington Post:

Can Trump Make Wages Great Again?

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