News of Payless Shoes filing chapter 11 bankruptcy hits Florida hard, with 50 stores being shuttered statewide, and putting hundreds of mostly low-wage people out of work.
In the first quarter of 2017, there have been nine national brand retail bankruptcies, with more to come. This is more than all of the retail bankruptcies filed last year. The reasons are complex, but as more mall stalwarts hit the skids, the explanation can’t be laid solely at the feet of “the economy.”
Let’s break it down non-fingerpointy-style.
- Online shopping. The astounding truth is that almost half of US households have an Amazon Prime membership. Delivery of everything from streaming entertainment to paper towels and groceries is a growing reality in time-strapped working households.
- Consumer reluctance. The Recession left its mark in consumer attitudes. They’re looking for deals, comparison shopping, reading reviews, and not pulling the trigger until they are certain that they have what they want at the price they want.
- Improving Economy. Employment and wages are up, but a lot of people are still playing catch up as they pay down debts and stuff money away as they try to restore lost savings. Boomers and Gen X’ers were hit hardest in the retirement pocketbooks. Now the oldest boomers are in their 70s and falling out of the workforce, the oldest GenX’ers in their fifties and putting kids through college. The last thing that they’re thinking about is getting that 70” curved 4K big screen.
- Experience vs. Stuff. Millennials – everyone favorite economic punching bag – like stuff, but only certain stuff. They’re picky about what they buy and from who. They’d rather go somewhere and do something memorable with friends of family than pile stuff into their McMansions. Part of the restaurant and bar boom is due to Millennials’ preference for “Hey, let’s get together for Taco Tuesday!” as opposed to “Let’s go to the mall!”
- Mall death. It’s a brutal face that we were over-malled. Acres of parking and stores ate up real estate and filled municipal and state coffers, fueled with big tax breaks, these hulks are emptying of stores as anchors close up and move out. A number of leases to mall retailers include a co-tenancy clause linked to having those anchors, and then that big space goes dark, a number of other tenants are finding it in their best interests to break the lease and close up with them.
All of this adds up to traditional retail that was unprepared for shifts in consumer attitudes, rising wages, online availability of everyday goods, crappy community planning, and vulture capital greed. The retail crunch is going to leave a lot of people holding the bag, still with bills to pay, families to feed, and needs to cover.
If you are facing job loss and debts, it might be time to talk to a professional who can help you make informed decisions about a way forward. Call out Palm Beach or Fort Lauderdale office and set up a free consultation to find out your best options.