Retail apocalypse refers to predictions that the U.S. retail sector is heading toward a severe downturn due to radical changes in that industry, the economy and shifts in consumer spending patterns.
Retail spending has grown steadily, though slowly, in recent years, but the American retail landscape is changing rapidly due to continued growth in e-commerce, an oversupply of shopping malls, and changes in what consumers are buying and how they are buying it. Online shopping -- which got its start in markets such as books and media -- has taken off in other areas, ranging from bedding to glasses. Easier return policies than in the past have also helped make e-commerce more attractive, and new apps and mobile wallets have made online shopping on smartphones common.
Although the biggest factor affecting brick-and-mortar stores is the surge in popularity of Amazon and other e-commerce companies, some economists point to pressures on retailers due to a shift in spending patterns since the Great Recession. Stagnating wages and high health care costs prompted people to rein in spending on clothing. There was a decline in demand for logo-driven brands and a growing interest in user experiences, particularly those that look good on social media, such as travel and restaurants.
Mall traffic is expected to continue declining and some anchor stores, or the large stores (usually department stores) that draw customers to malls, have shut down. However, although some companies have filed for bankruptcy, others have downsized and avoided bankruptcy while still remaining profitable, and still others have opened new stores.
The term has gained traction in news headlines and reports as some segments of the retail sector came under intense pressure in 2016 and 2017. Some economists and business experts, although acknowledging significant shifts in some retail segments and the potential for future turbulence, have suggested that the phrase “retail apocalypse” could be an overreaction and possibly a buzzword.