Brick And Mortar Retail Stores Are Being Crushed By Online Sales

Macy’s is laying off 10,000 workers. JC Penny is closing 68 stores this year. Retail store sales continue to decline.

What’s the cause of all of this?

Online sales.

In what some are calling the “Retail Apocalypse,” retail stocks are declining dramatically.

At the same time, Amazon’s stock price is rising.

This divergence between online and retail sales can be seen vividly in the chart below:

Retail Sales Online vs Department Stores - Brick and Mortar

The trend is unmistakable: Department stores are in serious trouble, while online sales are surging.

When we think of our own lives and purchases, this trend makes sense. Consider all the times you compare the online price and the in-store price. The online price – even with shipping and handling included – is often lower than the price in the store.

This creates overbearing pressure on the retail stores. The cost of maintaining a store and paying employees puts them at a financial disadvantage with Amazon’s massive distribution network – and numerous robotic workers.

Retail Apocalypse poses challenges for our economy

As manufacturing declined, many took solace in the idea that the retail sector would absorb displaced workers.

It hasn’t happened. Not only can many people not find work, but the retail jobs don’t pay anywhere close to what many manufacturing jobs did.

Now, the even “retail haven” is under siege.

The decline of brick and mortar retail sales shows why government must change its approach. The era of high taxation, and highly centralized government must end. To help workers adapt to the shifting economy, more money must be put back in taxpayers hands, and our social welfare system must transform. No longer can we afford to build huge bureaucracies. Instead, we must empower individuals and decentralize our system.

Otherwise, the retail apocalypse will become a financial apocalypse.

Spencer Fernando

Photo – Twitter

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