All across the nation, retailers are going bankrupt and closing stores. Evidently, this has been going on for many years, but as we are about to discuss, the bankruptcy numbers have never escalated as high as they did in 2020 in all US history. This is the worst retail cataclysm ever. To understand the extension of the damage – and if you haven’t taken a trip to a mall since the sanitary outbreak has hit American grounds – let’s picture a standard US shopping mall, with dozens or even hundreds of stores, consumers, and workers engaging, interacting and you can almost hear the sound of the economic activity flowing. Well, now this scenario is fading into a landscape that re-emerges almost entirely empty, with most stores closed, and the ones that remain open are liquidating stock so that they can shut down their doors for good, the customer presence is almost non-existent, the staff that used to be there to greet and assist the public is reduced to one person, timidly wearing a mask and standing alone behind the counter. That’s no wonder why they call it “retail apocalypse”, the setting looks exactly like one.
The stores are hollowed-out, malls are abandoned and the coming holiday season isn’t likely to change much of this backdrop. In fact, big retailers such as Walmart, Target, and Home Depot already disclaimed they will not be open during Thanksgiving day, Black Friday, or even Christmas, and many other stores are bound to follow the same move. This month we recorded the highest retail bankruptcy rate of the past decade, and the struggle isn’t over just yet, because the implications of more business closures will strike Main Street once again.
The columnist Donald Lambro has recently observed how damaging the effects of the virus outbreak were to this industry, leading retailers into a never-ending collision course. He pointed out that the new restrictions may have had a chilling effect on shoppers, who would naturally prefer to stay home and order goods online rather than risking exposure to the virus by venturing to department stores and shopping malls. Amongst the most reputed names that whether keep struggling to survive or have been already fatally pushed out of the market in face of the current crisis are Macy’s, Bed, Bath and Beyond, Kmart, Dunkin’ Donuts, Nordstrom, Lord and Taylor, Men’s Wearhouse, Joseph A. Banks, J. Crew, Neiman Marcus, Brooks Brothers and J.C. Penney.
Even though we do agree that the health crisis had a major influence on the collapse of this industry, it only boosted a trend that has been already happening. The massive bankruptcy surge didn’t just surface in February, along with the outbreak, but it certainly has amplified retailers’ problems. Since 2018, many of these businesses were signaling considerable failures in their activities. Back then, roughly 5,000 stores were closed, provoking shocked gasps in the markets. In 2019, the number escalated to almost 15,000 and the retail lay-offs experienced an increase of 92%. But nothing compares to what is happening in 2020.
A few weeks ago, we reported a Yelp study which has shown that by the end of August, 163,735 U.S. businesses on Yelp have closed since the beginning of the sanitary crisis, marking a 23% increase from July 10. The study outlined that in the wake of the virus-related cases surge and continuous changes in local restrictions still happening in many states it was possible to see both permanent and temporary closures rising across the nation, with 60% of those closed businesses not reopening, configuring in 97,966 stores that will now be permanently closed.
Likewise, a recent poll unveiled that 70 percent of Americans believe our nation is going in the wrong direction. Without jobs, income, and federal assistance, American households are facing lots of anguish and financial pain. If the present situation is being considered as an economic recovery, that’s a sign that much worse is coming next. If the US economy was really in a good shape, there wouldn’t be millions of vacant square feet on shopping malls that used to be filled with retail stores. The real state crisis is transforming some areas into ghost towns. And we have to say, the word apocalypse won’t cover what the future holds.