Recently, the brokerage firm Credit Suisse released the results of a study on retail store closures.
According to the report, 8,600 brick-and-mortar stores are set to shutter their doors in 2017. This is up from 2,056 in 2016 and 5,077 in 2015 with a combined total for the last 3 years being over 15,000 stores. Many of these stores are anchors that support other in the malls they operate in. Also, the 8,600 closures this year outpaces 6,163 closure in 2008 at the height of the Great Recession. CNN, which reported on these stats, concluded that it was Amazon and other online activity that was responsible for the closures.
My problem with CNN's conclusion is that, while it may be true in some cases, it doesn't square with what's happened in the restaurant industry which is also suffering from a loss of business and, logically, would be unaffected by online activity. As reported by Nation's Restaurant News, year-over-year, same-store sales were down 1.6% and foot-traffic was down 3.4% in March. This disproportional drop in foot-traffic versus sales implies that low-end restaurants are seeing the greatest losses in foot-traffic. And, this is worrisome.
The loss of low-end customers coupled with massive retail store closures tells me that consumer activity is weak. And, if consumer activity continues to wane, we could easily find ourselves in another recession since 70% of measuring economic growth is based on consumer spending. Then there's this reality. Store closures mean losses of jobs, and subsequently, losses of even more retail activity and restaurant foot-traffic. Further, restaurant job growth is now negative. Two facts that further point to a potential recession.
Stores are closing at an epic pace: http://money.cnn.com/2017/04/22/news/credit-suisse-retail/
Q1 restaurant sales performance disappoints despite March improvements: http://www.nrn.com/sales-trends/q1-restaurant-sales-performance-disappoints-despite-march-improvements