Major
retailers in the United States are shutting down hundreds of stores, and
shoppers are reporting alarmingly bare shelves in many retail locations that
are still open all over the country. It appears that the retail
apocalypse that made so many headlines in 2015 has gone to an entirely new
level as we enter 2016.
As economic activity slows down and Internet retailers capture more of the market, brick and mortar retailers are cutting their losses. This is especially true in areas that are on the lower portion of the income scale. In impoverished urban centers all over the nation, it is not uncommon to find entire malls that have now been completely abandoned.
As economic activity slows down and Internet retailers capture more of the market, brick and mortar retailers are cutting their losses. This is especially true in areas that are on the lower portion of the income scale. In impoverished urban centers all over the nation, it is not uncommon to find entire malls that have now been completely abandoned.
It has been estimated that there is about a billion square feet of retail
space sitting empty in this country, and this crisis is only going to get worse
as the retail apocalypse accelerates.
We always get a wave of store closings after the holiday shopping season,
but this year has been particularly active. The following are just a few
of the big retailers that have already made major announcements:
-Wal-Mart is closing 269 stores, including 154 inside the United States.
-K-Mart is closing down more than two dozen stores over the next several
months.
-J.C. Penney will be permanently shutting down 47 more stores after
closing a total of 40 stores in 2015.
-Macys has decided that it needs to shutter 36 stores and lay off
approximately 2,500 employees.
-The Gap is in the process of closing 175 stores in North America.
-Aeropostale is in the process of closing 84 stores all across America.
-Finish Line has announced that 150 stores will be shutting down over the
next few years.
-Sears has shut down about 600 stores over the past year or so, but sales
at the stores that remain open continue to fall precipitously.
But these store closings are only part of the story.
All over the country, shoppers are noticing bare shelves and alarmingly
low inventory levels. This is happening even at the largest and most
prominent retailers.
I want to share with you an excerpt from a recent article by Jeremiah
Johnson. The anecdotes that he shares definitely set off alarm bells with
me. Read them for yourself and see what you think&
*****
I came across two excellent comments upon Steve Quayles website that bear
reading, as these are two people with experience in retail marketing,
inventory, ordering, and purchases. Take a look at these:
#1 (From DJ, January 24, 2016)
Steve-
[Regarding the] alerts about the current state of the RR industry. This is
in line with what Ive been noticing as I visited our local/regional grocery
store, Walmart, and Target this week in WI. I worked in big box retail for 20
years specializing in Inventory Management. These stores are all using
computerized inventory management systems that monitor and automatically
replenish inventory when levels/shelf stock get low. This prevents out of
stocks and lost sales. These companies rely on the ability to replenish
inventory quickly from regional warehouses.
As I shopped this week and looked at inventory levels I was shocked. There were numerous (above and beyond acceptable levels) out of stocks across category lines at all three retailers. And even where inventory was on the shelf, the overall levels were noticeably reduced. Based on my experience, working for two of these three organizations in store management, they have drastically/intentionally reduced their inventory levels. This is either due to financial stresses/poor sales effecting their ability to acquire new inventory, or it could be the result of what was mentioned earlier regarding the transporting of goods to these regional warehouses. Either way this doesnt bode well for the whats to come. Stock up now while you can!
#2 (From a Commenter following up #1 who didnt provide a name, January 26,
2016)
Id like to tailgate on the SQ Alert based on my experience&
regarding stock levels in big box stores. This weekend we were in two such
stores, each in fairly isolated communities which are easily the communities
best source for acquiring grocery items in quantity.
I myself worked in retail (meat) for thirty years so I know exactly what a
well-stocked store looks like, understand the key categories and category
drivers, and how shelves are stocked and displays are built to drive sales and
profits. I also understand supply chain and distribution methodologies quite
well.
Each of the stores we were in were woefully under-stocked. This time of
year-the few weeks following the holidays-is usually big business in groceries
and low stock levels suggest either poor ordering at the store level, poor
purchasing at the distribution level or a purposeful desire to be
under-stocked.
Anyone familiar with the retail grocery industry is also familiar with how
highly touted the big box stores infrastructure is. They know exactly when
demand is high and for what items and in what quantities. It is very unlikely
that both stores somehow got surprised by unusually high demand. It is
reasonable then to imagine that low stock levels in rural areas with few
options is a purposed endeavor to assure that both the budget conscious and the
folks in more remote areas are not fully able to load up their pantries.
Simply put I believe the major retailer in question is doing their part to
limit the ability of rural America to be sufficiently prepared. Nevertheless,
we are wise to do our best to keep ahead of the curve. God bless your efforts,
Steve.
*****
Yes, this is just anecdotal evidence, but it lines up perfectly with hard
numbers that I have been discussing on The Economic Collapse Blog.
Exports are plummeting all over the globe, and the Baltic Dry Index just
plunged to another new all-time record low. The amount of stuff being
shipped around by air, truck and rail inside this country has been dropping
significantly, and this tells us that real economic activity is really slowing
down.
If you currently work in the retail industry, your job is not secure, and
you may want to start evaluating your options.
We have entered the initial phases of a major economic downturn, and it is
going to be especially cruel to those on the low end of the income spectrum.
Do what you can to get prepared now, because the economy is not going to
be getting better any time soon.
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