Traditional brick and mortar retail business are downsizing and placing an increased focus on ecommerce operations. In what is being described as a ‘retail apocalypse,’ over 40,000 members of the retail workforce have been put out of work since the beginning of 2019. While there were a series of layoffs and downsizing activities in 2018, the figure this year shows an increase of over 90 percent over last year.
Store closures are also becoming increasingly popular as a part of this trend. Retail giant JCPenney has made public its plans of closing over 18 stores. Lifeway Christian Bookstores made an even more shocking revelation as it announced closure of all its physical stores, which total 170. Other retailers such as Payless are also following a similar trend. Economists are speaking to the significance of this as such a drastic change in something as fundamental as the retail industry is indicative of a change in the lives of consumers.
The shift being experienced here is one that leads to increased use of e-commerce services. Many of these businesses that are now closing their doors are doing so to focus on the digital side of retail operations. That decision is already showing positive results for some firms that have reported strong ecommerce performance. Walmart reported a strong holiday performance as it expressed experiencing ecommerce growth of 43 percent.
This business model shift is in response to changes in retail consumer behavior. The president of the US National Retail Federation, Matthew Shay, expressed that the retail industry is experiencing transformation due to new technologies and alterations in consumer preferences.
Donald Trump, President of the United States of America, is not pleased with the effects on small communities that online retailers have had. He is of the opinion that cities and states are being cheated and that the system is unfair to tax paying stores.