Bri Dettlaff
Mrs. Straub
Insight AP Economics
2 February 2016
American Retail
Americans are too cheap for their own retail stores. Past popular apparel brands are acquiring a sharp decrease in sales due to teens wanting discounted and affordable pieces over “classic logos and status.” The economic activity of teen based retailers are slowly but noticeably decreasing. Gap, one of the biggest department stores, accompanying most malls around the country, is “closing a quarter of of it’s stores and laying off hundreds of workers after disappointing sales.” The many stores that are closing or decreasing their labor are bringing an overall drop to the labor force participation rate.
The most recent stores to close more the 5 locations are Abercrombie & Fitch, Barnes & Noble, Aeropostale, JCPenney, Office Depot, Sears, Macy’s and The Gap. Due to the consistent decrease of sales in each of these stores, they're forced to decrease their labor to increase profits, possibly merge together to increase revenue or develop higher quality products to create a fair match towards their competitors. Another source of of the increased retail unemployment rate, is the take over from online retailers, such as Amazon.com (the largest e-commerce operation). It is obvious that the “rapid growth of the Web is causing a traffic decline at physical stores.”(CNBC). Barnes & Noble was one of the first to be seriously impacted by Amazon's popularity when it originally came out as an online book store, Amazon “accounted for 44% of book sales in 2012” making Barnes & Noble’s profits to decrease and Amazon become a major threat towards many stores competing.
Supply is outweighing demand, creating an unneeded surplus of workers and products. A mall consists of so many stores, many competing with the same brands or products, because of this, customers are going towards the more popular and sometimes cheaper store. Online stores are all the buzz right now, “accounting for 13 percent of retail sales.” These external factors of the stores popularity and decrease of square footage are surely to blame, but a huge pressure that no one on the outside considers, is the decrease of labor. The decline of retailers will increase the unemployed creating more people looking for jobs and more discouraged workers along the way. The frictional unemployment will then increase our economies poverty level, since the people who once had a decent paying job will be on the job search for something that can sustain their living standards. The average wage will then go down so that companies can focus on increasing their profits and not increasing their workers wage. Consequently, because of the decrease in physical retail stores, it’s evident that online shopping will become the new norm, so everyone better get used to priority shipping costs and navigating the online retail world.
Works Cited
Lutz, Ashley. "American Retail as We Know It Is Dying a Slow and Painful Death." Business Insider. Business Insider, Inc, 2015. Web. 01 Feb. 2016.
McIntyre, Douglas A., Alex, and Er E.M. Hess, 24/7 Wall St. "Nine Retailers Closing the Most Stores." USA Today. Gannett, 2014. Web. 01 Feb. 2016.
"Retailers Are Closing up Shop. Here's Why..." CNBC. CNBC, 2015. Web. 01 Feb. 2016.
I found this article very interesting because I tend to shop at many of the stores listed above. I was not aware of their closing and, obviously, not the reasons why, either. I wonder if, since they're closing and their clearance prices will become more attractive to buyers and cause their demand for each store's products to increase, again. In all, I thought that this was a very well written and though provoking article.
ReplyDeleteOnline shopping is becoming more popular by the day because it is faster and more efficient in some circumstances. This causes unemployment for some workers in the retail industry because they lose out on a job as a result of structural unemployment. This structural unemployment occurs because of the advance in technology to purchase online items and may cause a select few individuals to quit and search for another field of interest from frictional unemployment. In the future, I believe that the majority of purchases will be made online because of its convenience.
ReplyDeleteThat's an interesting topic. I did not know that stores closing down was an issue. Is there any chance that the workers losing jobs at stores that are not doing well will be able to find employment at the places that are taking their business? I understand that online companies may not need quite as many employees, however I do feel like they could employ some of the workers who lose their jobs with other retailers.
ReplyDeleteI do tend to shop a lot at these different stores so i have a personal connection to this topic. It would make total sense that there would be more profits in the company if workers would be let go but it would decrease the supply of the good or service. Is this caused by an approach to a recession or by poor economic happenings in the market? Hopefully it's just in the market because the US GDP would decrease significantly and more jobs out of the market would be lossed.
ReplyDeleteThe increasing use of online shopping is becoming a serious problem for retail spaces. One thing that stores struggle with is having items they list for sale online, and not having them in the retail space. Consumers prefer to try on their clothes in the store. In the future I could see retail spaces going towards more online type sales. One day I could see everyone purchasing their clothes online because it is much easier for the consumer.
ReplyDeleteI found this story very interesting because of the significance of these stores and how they tend to be changing. Although these stores will most likely be known for a long time, it seems as if online stores will slowly take over simply because some consumers would rather buy online from their home rather than go out to a mall. Overall because of the changing preferences of younger ages and a dependence on technology shopping will with out doubt start to change a lot in the coming years.
ReplyDeleteI see why consumers would prefer to buy online- the convenience is much greater and it is faster than going to various stores to find the right product. I know that it does decrease the number of in-store employees, but what about the distribution centers? It would be interesting if you compared the unemployment of the store employees to the hiring of the distribution employees. It was very interesting to hear that big stores are closing as well. Great post!
ReplyDeleteConsidering more people are losing their jobs at the physical stores, they may need to try to gain a skill set that would be beneficial for an online store. This would decrease structural unemployment because more employees would have skills that meet the need of the market. I am surprised that Barnes and Noble is experiencing downsizing because I have never bought a book online nor do I read books on a tablet or iPad. But as clothing stores have experienced the negative of the internet, all markets will have to change their way of marketing and distributing in order to meet consumer needs.
ReplyDeleteThe unemployment rate has been steadily decreasing since the recession in 2008, so it is interesting to hear that there is a potential for a rise in unemployment because of major stores that are undergoing staff reductions and closings. I don't foresee all large department stores closing, however. There is still a large part of the population that does not participate in online shopping, and generally speaking, we need those stores to employ the labor force, so it is unrealistic to predict that all stores will close. There aren't enough jobs in online shopping market to employ the population. This was a really insightful article, great job!
ReplyDeleteIt's easy to understand why the physical retail stores are going downhill. Now a days everything can be done from the click of a button on your phone, making it more convenient for people too busy for going to the store. Although a large number of people are switching to the electronic side of things, their are still a large number of people who still appreciate doing things themselves. The books for example. Some people would argue that it is always better to read a book than look at a screen. There is still hope for the labor force in a bunch of areas.
ReplyDeleteI found it interesting that so many of these popular stores are closing. I find myself shopping at several of these often. But I can see why most of them are closing. Our society is all about finding sales and items that are cheap. Shopping online is becoming more popular due to the fact that no one wants to go out to the mall and buy their items they are looking for anymore. It's easy and convenient to order something online and for it to be delivered to your front door. This article was really eye opening to see how much our society it truly changing very simple things like shopping.
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DeleteI think that the decrease of physical stores is not necessarily a bad thing, so much as steps into the future of commerce and capitalism. The old is being replaced and the new is coming in, and people who have been recently unemployed can reapply their skills to other fields. While many of these people are losing their jobs young, this is even better for them because they can learn more marketable skills. At the same time, physical stores are omnipresent in all forms of capitalism and it would be near impossible to completely phase them out because it is an american pastime and tradition to go for a good, long, shopping trip. As for shipping costs, they also offset the large amount of money spent for gas as well as the sheer time taken to go and select things in person as opposed to simply finding things you like and putting them in a virtual basket. Time is money, after all. Interesting article.
ReplyDeleteThere is a definite change in what teenagers and young adults are interested these days, and I 100% agree that because most stores sell similar products to target this age group it has a lot to do with which stores are more affordable or more known in their name brand. However, I do disagree that online shopping is going to be more prevalent than physically going to the store. There is still a large number of the population, like myself, that do not like the idea of buying clothes before trying them on. But it is fact that because of the amount of the population that does enjoy the hassle-free online shopping that a number of stores will have to close, or really promote their online products!
ReplyDeleteThe decrease in customer activity in physical stores isn’t just a problem in retail, or a an issue derived from product prices, either. Even large franchises, such as Walmart that provide much more than clothing, and whose prices are known to be cheap, are closing nationwide. This isn’t a concern of solely retail or prices of products, which leads me to believe that a different factor, such as a decrease in full employment, has lead to reduced budgets of the common person, thus resulting in lowered consumption of all products. This is a very prevalent issue currently, and this piece did the topic justice.
ReplyDeleteI personally am one of those people that would rather shop online purely because it is more convenient. It amazes me the number of people who would also rather shop online. The companies where the majority of their customer base shop online would be losing profit by having stores when they could be using the money elsewhere such as the manufacturing companies. It is weird to think about how much technology has progressed and also makes me wonder if there will even be shopping malls in the future. Overall I really enjoyed your topic and it is definitely an issue that needs to be discussed.
ReplyDeleteThis is a very interesting topic because I was unaware of the fact that so many stores were closing. Although I did not know this, I am not surprised that a large reason for this is because of all the online shopping. I am someone who loves to go shopping, either online or in stores, but I do find online shopping to be a lot easier because you can look whenever you want. Since online shopping is gaining popularity, it makes sense on why some people would be losing their jobs, which is very unfortunate. In order to try and stop unemployment I wonder if any of the stores helped their workers find other jobs. When I have been shopping, I have noticed that Aeropostale has been changing its style of clothing and it seems to look even more popular. In order to add more to this post, you could try and see if any other stores, including Aeropostale, began to change their style to try and save their store. Overall this post was well written and did a good job connecting the post with economic terms.
ReplyDeleteI had no idea that so many popular stores were closing down. I personally feel that if they were to have more sales this could possibly change the outcome, Like most teenage americans I feel that the prices for stores like Abercrombie & Fitch and Barnes & Noble are very over priced. I would not willingly pay $50 for a pair of jeans because I know I can find less fashionable ones for a cheaper price. This could have also been caused by people not wanting to go to the actual stores to shop. Like most I find myself looking at stores websites on a regular basis and love shopping online. Although I find it sad that less people go to malls nowadays because it was always fun as a kid to go with a group of friends. Overall this article was very informative and well written.
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ReplyDeleteIt’s true that online retailers are becoming more popular because they tend to not only have more affordable items but they also allow for less effort to spend money. Taking out the driving and parking time as well as the time it takes to go store to store looking for outfits, Americans increasing laziness definitely seems to be affecting these kinds of stores. Personally I prefer to go to real stores to shop because it’s a fun pastime you can enjoy with friends and also I don’t own a credit card which makes it more difficult for me to do my own online shopping. Teens earning minimum wage probably don’t make enough to buy a lot from the mall because everything is so overpriced. No one wants a plain red sweatshirt for upwards of $35 from Forever 21 when they can get it for under $10 at Walmart. If companies can find a way to slash prices their sales should go up because it’ll be more worth the time and effort of the trip. The article itself is fairly well written, easy to understand and organized very professionally.
ReplyDeleteThis topic has many viewpoints and is very interesting, because I feel as teenagers we can really relate to this topic. I can say that I do a lot of my shopping online because it is not only sometimes cheaper but it is more convenient at times. As a consumer, I knew that online shopping was putting an effect on the amount of people go to physical stores, but I didn't think that this change would create companies to start closing down. The unemployment concern is very important because at the moment our unemployment rate is only 5.5% but as online shopping gets more and more popular the more jobs will be lost which is very unfortunate. When I go to the mall, I notice that many stores often times have sales to increase their amount of consumers and I also realized that many stores are adapting to the new teen styles. Something I think would be beneficial to add to this post would be to talk about how some stores are adapting their style and even have better deals in store than online to increase potential customers coming through their doors. Overall after reading this, I got a good general understanding of the problem/debate and believe you did a good job using economic terms to help us understand the topic easier.
ReplyDeleteThis appears to be a large issue at hand. You display the probable consequences of the retail store shut-downs very clearly. One thing I'm not sure about is whether this would cause frictional unemployment. This issue seems more along the lines of structural unemployment; This is due to the shift towards online shopping. I agree with Erika that this could lead to a decrease in total consumer consumption. Overall, nice job bringing evidence on a current economic issue.
ReplyDeleteI think it is very interesting that many people would rather shop online rather than going in stores. Personally I don't really like shopping either way but, I can see the convenience of shopping online rather than in stores. However, there still are a portion of people who like to go to the stores and try everything on before purchasing. Although, there is a portion of people who still prefer to shop this way that number is clearly rapidly decreasing based on the new technology of being able to shop online with free shipping. Overall, I thought that this was a very interesting topic and showed how many stores will be losing a large percentage of money by the shifting way to shop.
ReplyDeleteI found this article very interesting because I have really noticed the increase in online shoppers. Personally, I prefer to shop in the actual store. I wonder if with the increase in online shopping, more companies will take an approach like Nordstrom and offer free shipping both ways to try and add an extra incentive? Additionally, I was kind of taken back by the idea of department stores closing because I never really would've thought the internet and online shopping would take over to that extent. I wonder if in the future there will be no "mall" because all shopping will be done online?
ReplyDeleteI found your post on the issue at hand to be very interesting. The area I lived in in Ohio was not as wealthy as the Milwaukee area, and I remember Abercrombie shutting down in 2011 at the mall because they were not receiving enough business due to their hefty prices. I am sure that this has remained an issue in not only that area, but in other areas where consumers are unable and unwilling to spend $50 on a sweater. As a teenager, this is very a very relatable issue, because I am starting to purchase more of my own clothing, and care more about the price instead of the brand. I wouldn't necessarily say that I predict large department stores to shut down, but depending on the area in which a store is located, I can see the higher-end, higher-priced stores such as Abercrombie continuing to shut down.
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