An Alarming Recent Shift Spells Doom for Retail Stores in 2018

Retail sales have grown year over year for the past few years, yet some retailers are filing for bankruptcy and a shocking 12,000 stores are expected to close in 2018. This marks a huge shift in how Americans are shopping, and that spells doom for the traditional malls and shopping centers around America. So what is causing this shift, and what does it mean for the American economy overall? Follow us through the set of dominos, see where they fall, and ultimately, how it all will affect you.

1. There has been overall retail sales growth

shoppers carry retail bags during Black Friday

Customers carry shopping bags at the Newport Mall during Black Friday. | Kena Betancur/Getty Images

Retail sales are the total sales of anything you, the consumer, buy. Once a commodity has reached the end of the manufacturing supply chain, it lands in a retail company. Retail sales make up a trillion dollar industry, and represent about 6% of the U.S. economy. Over the past few years, sales have been rising steadily, despite a few modest dips in the calendar year. This all sounds well and good, but the reason it is succeeding is also the reason in-store retail purchases are in danger.

Next: The reason retail sales are rising.

2. Online and smartphone shopping.

Woman checking shopping list on her smartphone

Woman checking shopping list on her smartphone |

More than ever, people are shopping online. It’s where they get their groceries, pay their bills, and of course, buy their clothes. Let’s be clear: in-store purchases still dwarf e-commerce purchases by a landslide. But, e-commerce is growing at almost 4 times the speed of in-store retail business. A large part of that growth comes from streamlined purchasing on your smartphone, with things like Apple pay or Google wallet, and more user-friendly apps from retailers.

Next: That cornering of the market hasn’t protected in-store retail companies.

3. 12,000 brick and mortar stores will be closing

going out of business signs

Going out of business signs | Megan Elliott/The Cheat Sheet

In 2018, we are likely to see the largest retail store closings to date, with 12,000 closing for good. 2017 set a record as well, with 9,000 stores closing down. In addition to that, some of the major retailers that are household names are expected to declare bankruptcy in 2018, following more than 50 retailers going bankrupt in 2017. Those bankruptcies are in part due to looming debt, more experience-based purchasing, changes in bankruptcy codes, and (you guessed it) online shopping, according to CNBC.

Next: These closings and bankruptcies upset a very fragile ecosystem.

4. The importance of anchor stores to shopping malls

nordstrom sign on a storefront

A Nordstrom sign outside a store on in Miami, Florida | Joe Raedle/Getty Images

An anchor store, by definition, is “a store, e.g., a department store, that is the principal tenant of a mall or a shopping center.” These anchor stores typically drive traffic to smaller businesses that are also tenants of the shopping mall. So if you see a major anchor store like Sears, for example, declaring bankruptcy and shutting their doors, dozens of other businesses in the area will feel that loss as well.

Next: Shopping malls are closing across the nation.

5. Shopping mall ghost towns

Embed from Getty Images

Shopping malls were once the epicenter of Americana. They were where you ate, socialized and, well, shopped.  But the days of yesteryear are slipping by the wayside, and becoming boarded-up cautionary tales in some towns. A large part of those shopping centers closing is because their anchor stores have left. When those shopping centers or malls close, they also almost irreversibly damaged the local economies due to job loss, much in the same way as the motor giants closing their factories in Detroit.

Next: Shopping centers know the dangers of losing anchor stores.

6. Shopping malls are suing to keep doors open

Embed from Getty Images

Shopping centers are well aware of the ripple effects that come from closing anchor stores. That’s why in some cases, shopping malls are suing to keep the doors open for some businesses they don’t want to see leave, even if they are failing. In Bellevue, Washington, a Whole Foods ‘365’ store closed back in October of 2017 because it was failing. It was forced to reopen its doors in the Lincoln Square shopping center after being sued by the property owners.

Next: This all leads back to e-Commerce. 

7. Online and mobile shopping isn’t the end of retail

Hands holding credit card

Online shopping is getting bigger. |

The simple fact is that online and mobile shopping is contributing to the demise of the retail store and shopping center. We will see more places close their doors in the coming years and in that respect, we will see more people lose their jobs because of it.

But it’s not all doom and gloom, as long as the employees of the stores that are closing are proactive in searching for jobs within the new e-commerce economy. That means getting jobs in fulfillment plants, online retailers, or getting re-educated to start working in another career altogether.

Retail itself will survive and grow. It will just be in a different form than what we are used to. In all honesty, it will probably be for the better, with the added convenience of not having to head to a brick and mortar store for most of your goods.

Follow The Cheat Sheet on Facebook!