Nine of the 10 biggest retail bankruptcies this year were backed by private equity.
We used to go to the mall to be with friends and shop. Our social lives in the 80’s were much simpler than today. Go to the mall, be with friends, eat, talk, and shop. Today malls are eerily vacant and quiet with SALE and discount signs everywhere. Kids no longer go to a mall they go online to connect, shop, and talk.
Online shopping and Amazon not only changed the way that we shop but the way we work. Fewer retail jobs exist and digital jobs replace them. Retail jobs are often the first job we have as teenagers. Restaurants were located in and near malls to capture the traffic and now the traffic isn’t coming. The result fewer jobs are available and people no longer come together to physically engage with one another.
What do malls do with so much vacant space? Pop up stores for seasonal and new product introductions. Lego creates a mini theme park where kids play and then parents pay as they buy Legos on the way out. The experience economy is coming to the mall. Yet it is slow and unproven.
The downturn in retail results from the overbuilding of retail online competition, a shift in values away from purchasing things to acquiring experiences, and connecting online instead of eating and gathering at malls. Another hindrance to profit among retails is due to the greed of private equity firms who buy retailers, put them in debt, and eliminate funds for innovation and creative re-branding.
Take a look at the most recent retailers filing for bankruptcy:
|Bankruptcy||# of Stores|
|Toys R’ Us||1,600|
JC Penney, Macy, Nieman Marcus, and countless others are going lean, cutting the number of stores they have open. Retail as we once knew it is poised for radical transformation.