Is the retail industry on the verge of a big blow up?
Brown cited the rise of online shopping — where consumer goods are often offered at steep discounts — and the fact that most of the fastest-growing retailers at the moment are discount sellers, like dollar stores, at least according to a list of the fastest-expanding retailers recently released by the commercial real estate analytics firm CoStar.
“If you just look at Dollar General Corp. stores, who say they are opening something around 900 stores this year, that’s a store every 10 hours,” Brown told Forbes. “If you look at the top five dollar store chains in the last five years, they’ve opened up around 5,000 stores. That’s a new store every four hours.”
If these trends persist and consumers funnel even more dollars to discounters and online purchases, Brown believes some of America’s most recognizable brands in retail could be in big trouble.
“There’s a problem with size and scale, and I’m not optimistic about what’s in store for some of our most iconic American brands,” he told Forbes.
In addition to discount retailers, which Brown believes are quickly oversaturating their own markets, he also foresees trouble for large department stores, like Macy’s, and “boring” brands, like Gap, coming down the road. Amazon’s increasing dominance of the online retail market and fast fashion’s ability to produce clothing collections much faster and cheaper both pose major threats.
“During the 1990s, during the big-box retailer rise, we got away from service,” Brown told Forbes. “ECommerce has stepped in and is taking the place of what used to be the norm. Curated retail? That was how stores used to operate. The reality is we’re going to see more closures and bankruptcies in the next two to three years than expansions.”