The world may be thinking about George Floyd and maybe the spread of COVID-19, but what is burning still and even harder is the economic crisis in the US that is just getting started. Poverty is going to explode, and because it is tied to debt, there is nothing that most can do about it. In a recent article on BloombergQuint, it found in a report that twenty-five thousand stores may close because of economic problems. Most of these stores are in malls.
As many as 25,000 U.S. stores could close permanently this year after the coronavirus pandemic devastated an industry where many mall-based retailers were already struggling. The number would shatter the record set in 2019, when more than 9,800 stores closed their doors for good, according to a report from retail and tech data firm Coresight Research.
Most of the closures are expected to occur in malls, with department stores and clothing shops predicted to be among the hardest hit. “If the anchor tenants close stores in the mall, other tenants are likely to follow suit,” Coresight Chief Executive Officer Deborah Weinswig said in the report, which put the expected range at 20,000 to 25,000. “Department and large apparel-chain store closures in malls will therefore create a ripple effect that spells bad news for malls.” The U.S. has the most retail selling space per capita of any country and the lowest sales per square feet, according to commercial real estate company Cushman & Wakefield. Most retailers have been reluctant to shrink their store networks, but the pandemic has forced many to rewrite their playbooks.
American retailers went dark in mid-March in response to the Covid-19 outbreak, and — even though states are now beginning to ease restrictions — many shops are still shuttered or only providing limited service. As of June 5, retailers have planned about 4,000 permanent store closures, including hundreds by J.C. Penney, Victoria’s Secret and Pier 1 Imports. In March, before the extent and duration of the virus lockdown was clear, Coresight estimated that about 15,000 stores would shutter in 2020. Alongside the closures, the firm expects to see another spate of bankruptcies as debt-laden retailers are pushed over the edge. Fifteen major retailers have already filed this year. (source)
I have repeatedly stated in the past that people need to keep working, save money, pay down debt, and make the most of what they can right now because things are going to get a lot worse. That observation still stands as before.
But note how most of the closures taking place are in malls.
The mall was originally created as part of suburbia. As the suburbs were created to be a “middle ground” between city and country life, the mall is an attempt to bring the “city” to the “suburbs”. They are a creation of the post-world War II boom and really did not emerge until the transition fully to a consumerist economy in the late 1960s and early 1970s.
The mall is a new thing by historical standards. Not even a century old, it is a bump on the historical radar that is fading away into blackness because their models are unsustainable as they require a lot of constant spending to maintain.
The dying of the mall represents the dying out of suburbia and the harbinger of many major changes to the American economic landscape for the future. Perhaps it will become normal in the years to come for people to travel much longer distances to stores for the same goods as they do now, and perhaps many of the stores that exist now in mall will simply cease to be.
The future is going to be very interesting, but just as in past generations, it belongs to the thrifty and the wise who prudently use their wealth and do not waste it on fruitless pursuits.
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