Several U.S. retailers have announced that in 2014 they will be closing stores all across the country, showing that retailers expect continued contraction in the economy instead of growth for the foreseeable future.
CNBC recently reported that such retailers as Sears, JC Penney, and Macy’s are all announcing a wave of store closings. Other retailers, like Sam’s and Target, are laying off thousands.
Another report tallied some of these shutterings. “JCPenney, Macy’s, and Sears have all recently announced fresh rounds of closures and layoffs. JCPenney is closing 33 stores, Macy’s is closing five, and Sears is closing its flagship in Chicago–the latest of about 300 closures Sears has made since 2010,” Business Insider wrote at the end of January.
Experts also predict that this is just the beginning and expect many other retailers to announce job cuts, store closings, cuts in the square footage of current stores, or all three.
There are several reasons being offered to explain this contraction. One is that retailers have created “unsustainable inventories,” i.e. too much product on shelves and in warehouses.
Another is the loss of foot traffic at large malls. A report at Business Insider noted that shopping malls are “going extinct,” and as these large retailers continue to shutter stores in malls and look for stores with smaller square footage, this will hasten the decline of the shopping mall.
Then there is the increase in Internet shopping that has been impacting the brick-and-mortar retail sector, as buyers increasingly shop from the comfort of their own homes and take delivery by mail.
Another factor may be that the middle class has been hit particularly hard by all this economic distress. One report from 2012 estimated that the middle class had lost 40 percent of their worth, leaving less disposable income for impulse shopping at brick-and-mortar stores.
Whatever the causes, many retailers are contracting, not expanding, and this is an indication that this down economy is not expected to get better any time soon.