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retail apocalypse

Contributor(s): Corinne Bernstein

Retail apocalypse is a controversial term used by the media to describe the ways a shift in consumer spending patterns may be impacting the traditional brick-and-mortar retail store business model. The number of struggling and bankrupt retailers in the United States that have been affected by these changes, including Toys R Us, Macy's and Sears, has prompted predictions of the demise of in-store shopping and the contentious label "apocalypse," which connotes widespread disaster and destruction.

The brick-and-mortar landscape has changed over the years due to a number of contributing factors, including the continued growth of e-commerce and an oversupply of shopping malls. Although most experts agree that the biggest factor affecting brick-and-mortar stores has been the surge in popularity of Amazon and other e-commerce companies, many economists point to a shift in consumer spending patterns after the Great Recession as well as advances in mobile technology.

As mall traffic continues to decline, the anchor stores that traditionally drew customers to the mall have struggled to remain profitable. Efforts to reverse this trend include experimenting with how to differentiate customers' in-store experience from online shopping, with many traditional mall stores embracing a multichannel strategy that encourages shoppers to research online but pick up purchases in person.

Some retailers offer cheaper in-store prices for the same items that can be purchased online, while others have focused on making in-store shopping a unique lifestyle center experience that can't be replicated online. In spite of such efforts, Credit Suisse estimates that one out of every four shopping malls in the United States will close in the next five years and in many parts of the country, regional shopping centers with large parking footprints are already being redeveloped into condominiums, micro-apartments, hotels, healthcare centers and office space.

Some economists and business experts maintain that the recent high profile store closings are simply a market correction. While they acknowledge significant shifts in some retail segments and the potential for future turbulence, they suggest that the phrase "retail apocalypse" is misleading, if not outright wrong, and has become an unnecessary source of fear, uncertainty and doubt (FUD) for the approximately 16 million Americans who work in retail.

This was last updated in May 2017

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