The death of the American middle class has brought department stores down with it
S E E D E D C O N T E N T
After 160 years in business, Bon-Ton Stores filed for Chapter 11 bankruptcy protection in February. Just two months later, two liquidation firms won its assets at auction, setting off the process of closing all of its stores in the United States.
It was widely considered that the department store was the latest victim of the retail apocalypse, suffering from an industry-wide issue of sales increasingly shifting online while foot traffic to malls has slowed.
However, some experts say that there may be more to the story, and that its decline could also be attributed to larger social changes.
"The middle is disappearing — low and middle-income customers increasingly shop at discounters and dollar stores, forcing retailers that once served these customers, like Bon-Ton and its subsidiary brands, to close shop," analysts from intelligence firm Gartner L2 wrote in a recent report on department stores.
The slow decline of the middle class in America has had an impact on retailers that haven't adapted to the change. Increasingly, the most successful businesses in the sector have become more distinctly split into two sections: luxury and budget stores.
A recent report released by Deloitte titled "The Great Retail Bifurcation: Why the retail 'apocalypse' is really a renaissance" argued that consumers' shifting attitudes towards finances and social issues are at the core of the recent upheaval in retail.
"The vast majority of retail sales — 91% — still take place in brick-and-mortar stores, which means that online shopping represents just 9% of total retail sales. Even though the online channel is projected to grow 11.7%, in-store sales are also projected to grow 1.7% — hardly the stuff of apocalypse," Deloitte analysts wrote.
Instead, retail is changing in line with consumer income divides, meaning that high-end and budget retailers are seeing revenues soar, growing 81% and 37%, respectively, in the last five years, according to Deloitte.
Meanwhile, the middle is being squeezed out and has only seen a 2% increase in sales in the past five years.
For this reason, high-end retailers and discount retailers have become some of the biggest bright spots in the sector, while companies that rely more on middle-class spending, such as department stores Bon-Ton, Macy's , Sears , and JCPenney , have had to close hundreds of stores.
Jun. 26, 2018, 11:05 AM
Photo: AP/Charles Krupa
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The growing divide and the rise of dollar stores.
I went into BonTon 7 months ago looking for a dress to wear to a wedding unfortunately their stock was zero for a long gown, they had plenty online but nothing in store, that was part of their problem.
Never went to a BonTon before.
Here our JC Penney always put out things like prom dresses and always seem to have seasonal outfits yet they are still declining.
I'm not sure how clothing stores expect to sell clothes without them being available to try on. Any time I order online, I expect it to be a total crapshoot whether it will fit or not.
One time, I bought two blouses from a catalogue - the same blouse, same size, just in two different colors. Ordered from the same page in the catalog. One fit fine, and the other was huge.
I lucked out three times. I had two weddings, one in Nov. and one in Feb. I ordered one gown from Belk and one from Amazon. I am a short person so I knew I'd have to have them hemmed. I also bought a pair of shoes online from BonTon that I wore at both weddings.
I'm short, too, so that's an issue. I also have weirdly-shaped feet, to the point that it's hard to find shoes that fit even when I can try them on. So I don't buy those online at all.
Interesting that on line sales account for only 9% of retail sales. I would have guess a bit more than that.
Discount stores seem to be doing fine, but the middle income stores are taking a huge hit. Macy's, JC Penney and Sears keep closing stores
In our area we have had a new Dollar General open in the last few months. We have one about 4 miles away and this one will be 3 miles away in the opposite direction. Keep in mind that the two towns in involved have a combined population of 3500.
So the Dollar stores seem to be doing fine in todays world. Others not so good.
I thought it would be more too.
It seems foot traffic isn't really declining, just where the feet go.
I swear, here there is a dollar store every couple of miles.
There is a Dollar Tree about a mile and a half from my house. Best dollar store I have seen. It is very clean and many of their products are name brands. Everything in the store is a dollar, without exception. For example they see rasin bran for a dollar for a box. Of course the box is about a third of the size of the box of raisin bran you'd get in another store for about 4.50. They have Sara Lee bread, which sells for 2.95 in most grocery stores. Here it is a dollar. One catch, it is day old (but still perfectly fine.) They even sell tiny steaks for a dollar. (small portion).
Dollar stores are crappy and they try to pack too much cheap junk in a too small place
I don't mind dollar stores for some things, like cleaning supplies and snacks. But, yeah, they do sell a lot of poorly-made stuff that either falls apart at the first use, or doesn't do what it's supposed to do.
Don't worry about it. Mulvaney and Kudlow recently said Supply Side ( aka trickle down ) is working. There it is. There you have it. Nothing more you need to know.
Working in favor of some over others.
Supply Side is doing exactly as it was bred to do. Concentrate the wealth and consolidate the power. This is why Citizens United is so important to so few.
I knew the end was coming for Sears when they got rid of the in store sales of Ted Williams guns.
I miss our Sears. It closed a year or so ago.
For a long time I had it in my head that I had to buy Craftsman tools.
I had always liked shopping at sears many years ago. Being rather tall for a female (5'11"at the time) in my late teens, there were not that many stores that carried tall skirts or slacks for girls/women, and Sears was one of the very few who did. I could buy them through their catalog even if they didn't have them at the store. Back then, their merchandise was also moderately priced as well. All my family were Sears buyers for many years and shopped via the catalog, as there weren't that many local stores.
However, many things have changed over the years and Sears today is a far cry from what it once was. Their prices have increased over the years while stores such as Wal-Mart, JC Penny K-Mart etc took a big chunk of market. And there are far more stores that now carry Tall clothing as well.
But, I still like to shop at Sears for some things, so I always check to see if the Sears closest to me is on the closure list each time Sears announces store closures.
I wonder if Amazon will take over producing the Santa Claus Parade, when Macy's goes under.
Instead of the balloons being held by rope, they could be held by drones.
The march of the drones - sounds like a science fiction movie.
That might be worth seeing. Drones holding up the balloons and giving a birds eye view of the parade as well.