By now, I think everyone has had enough of blaming Millennials and Gen Z for killing this or that type of industry. You could argue that a very big comet killed the Tyrannosaurus rex, yet their descendants are still present in the modern-day chicken. When there is an extinction event, what is left behind either evolves or goes extinct. This is what we are looking at with a landslide of retail bankruptcies.
Millennials and Gen Z are no more to blame for the “death of retail” than they are for crop failures and souring milk. The mindless gawping of the chattering class points a Boomer finger at younger generations for failing to do what they had done at the same age, conveniently ignoring the fact that the Baby Boomer generation was enabled and supported by an infinitely higher tax base, higher employment, and programs that created the strongest middle-class that the world had ever seen. In short, the postwar prosperity as experienced by a large number of Americans from 1946 to the late 60s and early 70s was an anomaly.
It was an anomaly that created a large number of service sector jobs and a demand for goods and services not seen before or since. Likewise, the large number of women who were kept out of the workforce with the emphasis on marriage, homemaking, and motherhood kept wages low for returning servicemen who took over jobs that women had help through the war years. This drove explosive retail sector growth and expansion. Of course, throughout this time period number of companies failed and new ones started, a look at a list of defunct automobile manufacturers will show a huge number of them failed in exactly the same years as the postwar prosperity was taking off.
For that kind of growth to be sustained required a far deeper and more intensive investment in infrastructure and education than many were willing to make. While we have had prosperity in the years since it has been characterized by a boom and bust cycle that has instead squeezed the middle class and directed far more wealth creation to the top 40 percent than to the bottom 60 percent. Indeed, the latest of the bust cycles began in 2006 and is now known as the Great Recession. During this recession, there were a huge number of retail bankruptcies, corporate bankruptcies, foreclosures, and other disruptions to the financial lives of everyday Americans.
Among the casualties, Generation X – the earliest part of that cohort already hampered by graduating from college in the middle of a previous recession – saw a great deal of their wealth swept away in the foreclosure crisis and massive unemployment. For those Gen Xers, the prime years of their earning power were spent desperately scrabbling to hold themselves together financially. Sadly, a number who were trying to climb the ladder ended up falling back to the bottom.
Millennials – now defined as those aged 18 to 35 – experienced these disruptions as the younger siblings of Gen X or as their children. Generation Z – defined as those currently under 18 can be said to have grown up in an atmosphere of financial crisis, and never known anything else.
Retail bankruptcies and the radical reorganization of other service-oriented industries are due in entirety to a confluence of circumstances that created a perfect storm that is leading to the demise of retail as we know it.
Very bluntly, people need services like Amazon nowadays. It is the age of the gig economy, where even people with jobs that formerly provided for all their needs are often working side gigs in order to make ends meet. You’ll find a number of people with second job striving for Uber, or filling other sections of the gig economy such as content writers. With less time than ever, and more jobs than ever, having everything delivered to your doorstep can save you precious hours of running around town.
The smartest of retailers have evolved to use the Internet in order to reach out to a wider selection of customers. Those who initially underestimated the power of the Internet went on acting as if the malls would never close. Now it is institutions such as Sears who find themselves struggling for relevance and market share. The Limited, Perfumania, and OP are just a few shopping mall stalwarts that have fallen victim to retail bankruptcies recently.
Also ongoing has been the disruption to the lives of people who work for these companies and their families. Without that steady paycheck, even if they had side gigs, they find themselves falling into debt and out of their tenuous place in the middle class. While the members of the board may go onward and upward, these families are feeling real pain and experiencing real loss.
If you or your family is experiencing difficulty and debt as a result of losing your job in retail call Van Horn Law Group. We can help you through the rough spot, and into a brighter future.
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