Retail Meltdown Leading to Bankruptcy
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0 CommentsAs the economy has been in recovery mode, hundreds of malls and large retail shops are closing their doors and filing bankruptcy.A few of the reputable companies that have recently filed for bankruptcy include:
- Mattress Firm
- Nine West
- Toys “R” Us
- Vitamin World
- True Religion
- Sports Authority
To what can this be attributed? In large part, people are shopping online. From clothing to children’s toys to electronics to household goods, consumers are not only able to “window-shop” for these items online, but also complete the purchase at the click of a button. One only needs to look at the rise of Amazon. In the past year alone, haven’t you bought, or at least viewed, an item for purchase online?
Nevertheless, over the past couple of years there has also been an increase in retail space. According to a 2017 Cushman & Wakefield report, the U.S. has the most retail space per capita with 25 square feet of retail space per person, compared to 17 square feet in Canada and 13 square feet in Australia ― the next two countries with the most retail space. The problem is that the U.S. also has the lowest sales per square foot, at approximately $500.
Another explanation is the rise of social media, primarily Facebook and Instagram, which has led to younger people spending less on retail items and more on experiences that they can post about, such as traveling and dining out. It is no coincidence that there has been a significant increase in travel costs, as well as in the amount of food halls and restaurants that have opened in the U.S. over the past 3 years.
As consumers continue to change their shopping habits, there is no doubt that there will either be a change in how retailers and marketing companies attempt to bridge the gap between buyers and the retail stores, or more retail shops will close their doors, likely resulting in more bankruptcy filings.