“Everything must go” is typically a phrase reserved for big clearance or store closure sales. Speaking to the latter, what results from those brick-and-mortar stores shutting their doors can be devastating to many. After the last customer has been rung up and the last item has been sold from the store’s warehouse inventory, what’s left are usually several retail professionals looking for new employment.
For years, the retail industry has expanded physical spaces by building out either elaborate standalone structures or taking up large sections inside malls. Now that eCommerce has been in effect for nearly 20 years, several retailers are finding themselves facing a tough decision. To help maintain profits, or sometimes in order to keep from going bankrupt, retailers are either shutting down a slew of stores or closing up shop all together.
As of June this year, there have been 5,321 brick-and-mortar store closures, which equals a 218 percent increase year over year, according to news from Fung Global Retail & Technology’s “Taking Stock in Retail: The 2017 Midyear WrapUp” research report. On the other hand, it was also found that there were 3,262 store openings, which is a 53 percent increase year over year. This still leaves 2,059 store closures out in the lurch, along with several thousands of employees looking for retail jobs.
Experts, including Credit Suisse Group’s Analyst Christian Buss, say brick-and-mortar stores are on track to see a record-breaking amount of closures, totaling 8,640 locations.
The retail industry is undergoing an evolution. There’s no question about it. One of the largest factors, it can be argued, that’s impacting the traditional brick-and-mortar side of retail is the rise of eCommerce. One of the businesses that just might have some blood on its hands is eCommerce giant Amazon.
It’s tough to talk about retail and not include Amazon. As we reported last week, 53 percent of all U.S. eCommerce sales growth and 55 percent of all consumer product searches belong to Amazon. According to Fung Global Retail & Technology’s research, Amazon has averaged out to 4.5 acquisitions per year for the last seven years, totaling 31 companies and investing $520 million to do so. And that’s without including its June 2017 $13.7 billion acquisition of Whole Foods.
Amazon means serious business when it comes to shopping, and retailers have certainly taken note by integrating more technology aspects into their daily commerce routines. With the number of store closures, the concern over retail jobs is a growing area. According to the Labor Department, February and March of this year saw 30,000 retail jobs eliminated for each month.
If this job loss pattern stays on track, that would amount to 360,000 for all 12 months of 2017.
Back in April, Urban Outfitter’s Chief Executive Officer, Richard Hayne, commented on the retail industry’s conundrum and didn’t exactly paint a rosy picture, pointing to the impact of too many stores in shopping malls. “This created a bubble and, like housing, that bubble has now burst,” said Hayne. “We are seeing the results: Doors shuttering and rents retreating. This trend will continue for the foreseeable future and may even accelerate.”
With the gloomy outlook predicted, brick-and-mortar stores are likely going to continue this path and that pushes even more people into unemployment. In a sense, the U.S. is in the middle of a jobs crisis, but nobody is talking about the industry that’s being hit the most: retail.
It’s so bad that even Nobel Laureate and current New York Times op-ed columnist Paul Krugman has compared retail job loss as being worse than what’s happening in the coal industry. “Fun fact: Retail trade lost more jobs in the past two months than coal mining lost in the past 20 years,” Krugman tweeted.
One avenue that retail professionals can take comes from the National Retail Federation (NRF) with its new certification program which launched this past January. Dubbed RISE Up, this program is granted exclusively to people who’ve been laid off in retail and offers up a way for training those people into a distribution warehouse, store management or digital-related position. NRF’s CEO, Matthew Shay, commented on this big shift in the retail employment landscape to NPR. “The velocity of change is unlike anything we’ve ever seen. Before, things happened over a generation; now they’re happening overnight,” said Shay.
While everyone is busy talking about the massive store closures and the shift in retail jobs, not many are discussing what happens should brick-and-mortar stores continue to close. Where will all of the retail professionals go for work? Outside of NRF’s certification program, there do not seem to be many other avenues for these employees.