As customers looked for discounts and deals, the profit
margins of retail outlets were seriously squeezed. Another factor: higher interest rates. Rising loan costs
have reduced consumer demand for the big-ticket items — furniture, pools, bedroom sets, home remodeling — that often require financing. Crime is also causing a retail pullback. Target shuttered
nine stores in four states last year amid concerns about the safety of workers and customers. CVS, Macy’s, and Walmart also say theft has become a significant problem for their bot- tom lines. Retailers have locked up merchandise because of a nota-
ble rise in organized theft, where two or more people grab merchandise and then resell it. In many cities offenders are turned loose because of no-bail laws promoted by progressive prosecutors. The National Retail Federation said inventory loss cost
retailers about $112 billion in 2023. But by far the biggest impact, experts say, is that consum-
ers are scouring the internet for deals, purchasing more and more of their goods online. In 2012, only about 5% of all U.S. consumer purchas-
es were being made online. That took a big leap during the pandemic. The subsequent lockdowns and social dis- tancing forced many consumers to adopt online shopping. And by the third quarter of last year, the e-commerce share of all retail purchases had more than tripled, to 16.2%. It seems more and more consumers have learned they no
longer have to walk into a brick-and-mortar location to buy the products they want — especially if they can get a better deal online.
SHIFTING CONSUMER BEHAVIOR Bryan Cutsinger, an assistant professor of economics at Florida Atlantic University’s College of Business, points out that maintaining a brick-and-mortar storefront is expensive. Payroll costs keep rising and store inventories must be care- fully managed to turn a profit. That’s especially the case when inflation has left consum-
ers reluctant to pull out their credit cards. Consumers unwill- ing to pay extra to push a shopping cart down store aisles are more likely to shop online. That reality has left tens of thousands of retail employees jobless.
2,000 of its 8,000 locations, according to company oficials. According to the Associated
Press, the sector has shut down a whopping 7,000 pharmacies since 2019. New York City has seen half
its drugstores shuttered in the last decade, with 10% closing just last year. Experts blame
drugstores’ stepped-up security measures — most notably locking merchandise behind plexiglass, forcing customers to call and wait for store clerks. Pharmacy executives also blame insurance companies and pharmacy benefit managers. Their influence over prices and reimbursements is squeezing
If anything, the online impact is expected to grow as baby
boomers’ buying power fades and younger consumers take over. Mobile apps and smartphones have boosted the popu- larity of mobile commerce. Surveys indicate millennials are the demographic most
likely to make purchases online. In 2022, over half of millen- nials said they purchase items via the internet. Cutsinger doesn’t believe the retail business woes mean
economic storms are on the horizon. He notes overall con- sumer spending and GDP remain robust. “Instead,” Cutsinger tells Newsmax, “I suspect what’s happening is that consumers are choosing to do most of their shopping from online retailers, who may be able to offer the same products as their retail counterparts at a lower price.”
ONLY STRONG SURVIVE One report by global financial services company UBS recent- ly likened the current retail environment to “the survival of the fittest,” adding, “Walmart, Target, Costco, Home Depot, and other large, leading retailers stand to gain from this natural selection.” Most analysts agree that more retail businesses will strug-
gle in the years ahead. In fact, UBS predicts another 45,000 U.S. store locations will close by 2028. By then, it projects that one out of every four U.S. retail purchases will be made online, rather than in a store. Cutsinger says that over time, brick-and-mortar stores
may need to focus more on products consumers need to interact with. An example would be business or formal clothes that require a custom fitting. “Nordstrom is probably not going anywhere because
people want to shop for clothing and accessories,” Cutsinger says. “Sometimes you really want to try on multiple items, and you need to figure out sizes.” Of course, new stores always pop up to replace the outlets
that close. And retailers can find hope in President Donald Trump’s push to ease the regulatory environment. For some of them, lower regulatory costs may be just the break they need to stay in business. Cutsinger says that along with high- er demand thanks to rising incomes, lower regulatory costs could slow the pace at which retail stores are closing. “Although,” he hastens to add, “I doubt it will reverse
the trend.”
their profit margins, they say. With fewer stores, activists and legacy media are bemoaning the emergence of “pharmacy deserts” — communities they say suffer from a dearth of medications and pharmacists. But due to the expansion of mail orders and door-to-door
delivery, storefronts just aren’t as important as they used to be. Amazon, for example, has pharmacists available 24/7 to answer patients’ questions, and it offers next-day medicine delivery in many markets. Lyft and Uber, meanwhile, offer door- to-door delivery of prescriptions as well. — A.H.
MARCH 2025 | NEWSMAX 17
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