A headline in today’s Seattle Post-Intelligencer proclaimed “The retail apocalypse has officially descended on America.” Quite a dire news story. While the news is of some concern given the shear number of store closures and the job loses they represent, it does not reflect the end or apocalypse of retail. Part of the contraction that we are seeing is the continuing trend of shoppers buying on-line: but another significant issue is the glut of retail space.
Forbes reported in 2015
“Since 1995, the number of shopping centers in the U.S. has grown by more than 23% and GLA (total gross leasable area) by almost 30%, while the population has grown by less than 14%. Currently there is close to 25 square feet of retail space per capita (roughly 50 square feet, if small shopping centers and independent retailers are added). In contrast, Europe has about 2.5 square feet per capita.”
Also, the glut of retail space is not a new phenomenon. Retail expansion has far outpaced population growth since the mid 60’s. As shopper trends continue to evolve and the demographics of the United States continues to shift, we will see some retailers contract or disappear (Sears/Kmart/Sports Authority) or move online (The Limited). We will see malls close or reinvent themselves in areas that cannot support the amount of stores.
To keep things in perspective I offer some facts from the International Council of Shopping Centers reported on the website.
- U.S. shopping-center retail sales total more than $2.26 trillion, accounting for over half of all retail sales.
- In the United States, there are over 12 million shopping-center jobs, which account for 9.3% of the nation’s workforce.
- There are approximately 109,500 shopping centers in the United States ranging in size from the small convenience centers to the large super-regional malls.
- In the United States, malls account for 17.9% of all shopping-center space (gross leasable area).
- Consumer spending accounts for approximately 70% of U.S. gross domestic product and is the primary driver of the country’s economic wellbeing.
While retailing continues to grow along with incurring bumps and bruises along the way, I think the news of the death of retailing may be exaggerated.