Great Retail Collapse: The Devastating Impact Of Mass Store Closings In America's Biggest Chains
The U.S. retail industry has been undergoing some drastic changes in recent years. We have lost thousands of iconic stores and seen many popular brands disappearing from our economic landscape, in a phenomenon known as the “retail apocalypse.” Now, the latest reports show that the ongoing recession is forcing some of the biggest retailers in America, including names like Nike, to conduct mass store closings once again as they rush to cut costs and boost their profit margins before consumer demand declines even further in the months ahead. Industry insiders expect retail bankruptcies to soar this year, with many companies being overwhelmed by an oversupply crisis and the slowest sales growth recorded since 2008.
In recent weeks, some retail favorites have been closing stores in droves as the retail apocalypse comes back with a vengeance. The combination of declining sales, rising operational costs, slower foot traffic, and changing consumer patterns are pushing many popular brands to shutter brick-and-mortar locations before a full-blown recession wreck havoc on their bottom lines as they attempt to weather the storm that is ahead.
Grocery chains like Piggly Wiggly and IGA Supermarkets announced in January that they will start closing multiple locations for good very soon. Meanwhile, in the apparel sector, things are looking ugly. With Americans cutting back on discretionary purchases, many brands are watching sales collapse and they are being left with no alternative other than closing up shop. The scenario is looking so bleak that even consolidated brands like Nike are closing dozens of stores, starting with locations in Ohio, Seattle, and New York City, the company confirmed to The Enquirer. Nike’s inventory glut sent the company’s stock to the lowest level in 20 years. Before the health crisis, the sports retailer was already experiencing a cash flow crisis, and tightening credit conditions are certainly not helping the situation.
Many other struggling chains are at heightened risk of bankruptcy as consumer spending softens. The new wave of turbulence in the sector comes as the end of 2022 has seen an uptick in loan defaults from multiple retailers. But this time around, industry experts say that America’s classic department stores are at the highest risk of going under.
Reports show that in the past seven years around 40 percent of the nation’s department stores have closed. A new forecast shared by UBS analysts warns that national chains will be forced to shutter some brick-and-mortar locations to better position themselves for the recession that is at our door, – “even those that survived the combined challenges of the retail apocalypse, which devastated the industry from 2017 to 2020, and the pandemic shutdowns. That’s because months of inflation and a looming recession are eating into sales at mid-tier retailers,” the analysts highlighted.
With inflation cooling slowly, the outlook for mid-tier retailers is dim. “I suspect there’s going to be a whole round of restructures, bankruptcies, all sorts of upheaval, as we approach the end of the year into next year,” the director of retail studies at Columbia University, Mark Cohen, said to Insider. What lies ahead for American retail remains shrouded in darkness, and the impact of the retail apocalypse will haunt us for generations to come. This crisis has cast a long shadow over America, and its consequences will be felt far into the future, leaving us to ponder the grim reality of a world without physical retail stores.