When you see these three names you think American retail strengh. But, in the past couple days into the New Year Sears and Kmart have announced the closure of 150 stores plus the selloff of their iconic Craftsman tool brand to Stanley/ Black & Decker for nearly $1 Billion. Macys has also announced 68 store closings and 10,000 layoffs as well. How have we gotten to the point of longstanding retail giants closing? What has happened to these institutions? Here are two theories that I have about it.
1. Online Shopping has become cheaper and more convienient.
Online sites like Wish, Amazon, Wayfair, Ebay have made it easier and cheaper to buy and order products than a store. Another plus to online shopping is that there is free shipping in most cases on orders over usually $50. You can get the orders in a matter of days to hours now with faster shipping options including drones.
2. Many retailers are not wanting to pay employees higher wages.
A couple of years ago Walmart had announced that they were raising the minimum pay rate from $7.45 per hour to $9.00 per hour. With employees who have served longer making even into $13-$15 per hour. Recently fast food workers have been protesting for higher wages too. But, the retail and fast food industries have found ways to lessen their work force. They are now using Electronic Point of Sale machines. McDonalds has been testing out the kiosks in many major markets. Walmart, Target, Kroger, among many major retailers have also grown the number of self checkout machines in their stores. All of this in order to keep their employment costs low and save money.
I remember as a kid going into Kmart and getting pop corn and a cherry slushie from the snack bar looking the toy and electronic aisles. My grandparents went to Sears many times to get appliances, Tires, and clothes all on a Sears Credit Card. In the 1970s and 80s even into the 90s Kmart and Sears were the two most dominant American retail chains until Walmart came along. Even JCPenney has managed to make a great comeback. It's becoming more and more evident that Sears,Macys,Kmart, and Kohls will eventually join the other iconic brands like Montgomery Ward, Radio Shack, KB Toys, Blockbuster, Circut City, Funcoland, and others into non existance.