Not a Tsunami, A Glacier

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source: CNBC

A 'tsunami' of store closings expected to hit retail

Get ready for the next era in retail—one that will be characterized by far fewer shops and smaller stores.
On Tuesday, Sears said that it will shutter its flagship store in downtown Chicago in April. It's the latest of about 300 store closures in the U.S. that Sears has made since 2010. The news follows announcements earlier this month of multiple store closings from major department stores J.C. Penney and Macy's.
Further signs of cuts in the industry came Wednesday, when Target said that it will eliminate 475 jobs worldwide, including some at its Minnesota headquarters, and not fill 700 empty positions.
Experts said these headlines are only the tip of the iceberg for the industry, which is set to undergo a multiyear period of shuttering stores and trimming square footage.
Shoppers will likely see an average decrease in overall retail square footage of between one-third and one-half within the next five to 10 years, as a shift to e-commerce brings with it fewer mall visits and a lesser need to keep inventory stocked in-store, said Michael Burden, a principal with Excess Space Retail Services.
Getty Images
"I believe we're going to hear a lot more announcements in the coming months," Burden said. It's "an indication that there is a shift in the retail environment and it's one that will continue."

Montgomery Ward - These two words when used together would cause the same reaction to most people under 30, as if you said “Giraffe typewriter” to them.  Just two seemingly random nouns.  Montgomery Ward still exists as an online retailer.  That’s news to me.

My point is that what is described in the story above has been going on as long as I have been alive, and if you say the cause is changing consumer habits and taste, it’s been happening since the end of the 19th century, and probably more accurately, since some caveman opened the first mammoth meat, rock, and spear store.

The one big inaccuracy in the story is in the headline.  This isn’t a tsunami, it’s a glacier, slow moving, and unstoppable.  A tsunami is a disaster that takes place rather quickly.  Recovery and rebuilding afterwards are also relatively quick.  So quick in fact, that afterwards, the affected area appears much the same as it did before the disaster occurred.  It’s also relatively easy to avoid the consequences of future tsunamis simply by making a few minor adjustments, like rebuilding a couple miles inland, on higher ground.

A glacier is an entirely different animal.  It not only destroys everything in it’s path that is not nimble enough to move and change, it changes the entire landscape for a very long period of time, and cannot be avoided by making minor adjustments.  Rebuilding is not an option, and will not be, for thousands of years.

The major retailers in their current form, are dinosaurs, destined for extinction.  Even if any of the individual retailers survive, they will have to evolve to the point where they no longer resemble what they once were or are now.  The companies may survive, but the traditional department store is dead.

Anyone who watches cowboy movies, understands this.  Every town used to have at least one general store, but the days of selling livestock supplies, food ingredients, and makeup, all under one roof, died out over 100 years ago.  People these days prefer to shop at stores that tend to specialize in just a few categories.  The reason I do, and I assume it is the same reason for everyone else, is because stores like this have a better selection of any particular item than a store that tries to sell everything.

Where I live, regional chains that specialize in rural and suburban life, like Farm and Fleet and Fleet Farm do quite well.  The stores mentioned in the above article that seem to be doing well, also have a similar strategy - Don’t dilute your strengths by trying to be all things to all people.

Instead of criticizing the big chain department stores for what they may or may not have done that has led to their demise, we should be congratulating them for being able to survive long, long after their heyday ended.  It’s not the internet’s fault either, stories similar to the one above have been in the news long before Al Gore unleashed his evil monster upon the world.  The internet reflects consumer habits more than it drives them, but it is just one more force that ensures that this trend is not going to reverse itself, anytime soon.

           It’s been going on  forever, and is one of the few things that I cannot blame upon Obama.  Oh, what the hell.  I’ll blame this on Obama too.


  1. hey Neil,

    Good article. I am sure the obunglercare mandates and the general regulatory burden is also a factor in it.

  2. It's been going on my whole lifetime. I can never remember any stories about Sears, K Mart, and JC Penny were doing well. Think of all the ones that are no longer with us. Montgomery Wards, Venture, Zayre, I've forgotten more than I cam remember. Shopko is another one that's had hard times. Gimbels is gone, right?