It's more than Amazon: Why retail is in distress now

With more than half of 2017 still ahead, the retail industry is seeing a record-setting pace for bankruptcy filings and store closings — and more are expected in the not too distant future, despite what most consider a healthy consumer.

This tipping point for retail is the result of a number of compounding reasons, but the inability to pay looming, massive debt bills is dealing the final death blow to many.

More online shopping

Yes, more shopping is shifting online in general, and to Amazon specifically, as in-store shopping traffic and sales trends fall for many retailers and shopping centers. Slice Intelligence said 43 cents of every online dollar is spent on Amazon, based on its analysis of millions of email receipts.

However, according to the latest Commerce Department retail sales data, 86 percent of all retail sales (excluding motor vehicles and parts and food service and drinking locations) are still made in physical, brick-and-mortar locations. To be sure, the online versus in-store sales breakdown varies wildly from retailer to retailer.

Less stuff, more experiences

While some shopping is shifting from stores to the web, other spending is being diverted from physical goods, particularly, clothing.

In 2005, 3.6 percent of total U.S. retail sales went to department stores; now it's less than 2 percent, according to government data. Retailers like Macy's and credit card companies have discussed the shift in consumer spending from physical goods to experiences like travel.

Plus, for years now, Americans have been making bigger purchases or investments like their homes, which has paid off for Home Depot and Lowe's.

This is my purchasing pattern but it has nothing to do with instant gratification. I use Amazon because I will purchase something when I remember to. “Oh yeah, I need dog food, but it’s 10 p.m.”. Then an hour later I remember “I need socks.” Seriously, what store is going to carry dog food and socks? Amazon fixes this problem without me having to spend an hour driving to two different stores, finding parking, finding the article in the store the next day IF I happen to remember. I order it inside of 3 minutes and I can safely forget about it. I postulate that many folks are discovering this convenience as well. You make it sound like people who go to the store are morally more virtuous based on a lot of speculation. I would point out that going to the store and seeing and touching things you have no intention of buying are nothing but exercising the lust of the eyes for material things. So maybe buying online is more morally virtuous.

I also buy from Amazon because when you go to a brick-n-mortar store, unless you have done a great deal of research (online?) or you have personal knowledge about what you’re buying, you have zero basis for comparing products. You have no idea which ones are quality and which ones are garbage. With everything on Amazon there are customer reviews which help you assess the quality and in many cases suggest a superior alternative. It’s not perfect, but it’s considerably better than standing in the store in front of 10 different brands and not knowing anything. So that is another set of reasons why I (and likely others) use Amazon.

Finally, Amazon takes a number of payment options. I pay with a Debit Card (i.e. digital cash) and I’m sure many others do as well. So your hypothesis, I think, fails in a number of ways.

Your post rankled me because it paints people who have completely rational reasons for shopping online as opposed to going to a store as agents of moral decay. This is, I believe, shallow logic.

So, shopping becomes a “get in, get what you need, get out” experience.

I am that way about our local mall. I used to go to the mall quite frequently when I was younger with small children; but, no more. And, I never go there at night.

I have one more complaint which may explain the online trend. The manufacturers went, and maybe are still going, on a binge of taking a simple product and making multiple variations of it. What I noticed was at some point, items I used to be able to get at multiple stores, I could no longer find. The shelf space being taken up by multiple variations of the same product, squeezing what I used to buy off the shelves. It is now at the point where most of the stuff I want to buy (toothpaste, deodorant, etc.) is no longer available to me at a store. However, I can get most of it online --- so, I order these things online.

During the heyday of department stores - I'm talking 1950s to perhaps late 1970s here - sales clerks were not just register ringers. They truly knew their products inside and out and were experts. They made decent commission and had a middle-class standard of living. A neighbor of mine growing up sold cameras at a department store and owned his own home while raising four children with a stay-at-home wife. But he could actually explain what an f-stop was and could teach you about how to take first rate photos in just about any situation. Then he sold you just the right camera for your skill level. Because he knew if he upsold you, you'd be intimidated and would never come back for that more expensive camera later on.

It's inconceivable that he could attain the same standard of living today selling cameras (or any product or appliance) for a Best Buy or a Walmart. In fact, I think most big-box stores have done away with commissions altogether, simply electing to hire kids off the street looking for part-time work between school and their first real job.

The result is that you have to do your own research before purchasing an appliance so that you go to the store already knowing the make and model you want to buy. Because if you rely on those kids to sell you the right product for your needs, you will likely be disappointed.

It then becomes a logical extension to just buy the product online, since you are already researching it online.

Part of this is driven by the fact that consumers want to pay a low price always and now have phone apps that can tell them where to get a given product cheaper somewhere else, forcing the retailer to either match the price or give up the sale. This forces the retail establishments to cut corners so that they can bring their floor prices down to just over cost.

It is becoming rare to find anything I am looking for on a shelf. Retail execs think having left over stock is bad so they have little in the first place.

Especially at clothing stores. Unless you are in that 80% range of sizes, good luck finding anything at all. Yes, you can go to the "big and tall" stores but everything is geared towards "big" or "big and tall" rather than "tall and thin" and priced at least 50% higher than a regular retail clothing store. It used to be fairly easy to find trousers with either 34" or 36" inseam with waist sizes under 40". Now it's mostly impossible. So I'm out of luck and forced to go online to get clothing that fits me properly. So far, I've had good luck.

I have a lot less clutter, I have more money in savings (and investments) and not surprisingly, I'm actually happier.

I have had a similar experience. I used to be quite the collector. Music CDs (and earlier vinyl albums). Books. Magazines. Videotapes. DVDs. You name it.

Then around the mid 2000s, I came to this realization that pretty much everything I want to listen to, watch, or read is now online.

I now pay Apple $9.99 a month to have unlimited access to their music library (40 million songs) and I give Netfix and Amazon about $20 a month (total) to have unlimited access to their movies, TV shows and documentaries. Almost any other video is available on YouTube. Almost any magazine or newspaper article ends up online for free.

I still hold on to my books because they look nice on the shelves but everything else has been purged. Even newer books, I'm reading on the Kindle app. I might still buy a physical book every now and then.

I've been noticing the Post Office vehicles in my neighborhood on Sundays for a couple years now. Eventually, I realized that Amazon had commandeered the USPS fleet for Sundays because they just couldn't keep up with their volume the rest of the days. That's when I realized online shopping has reached a whole new level.

Now there is talk of same day delivery of Amazon items with trucks full of high-demand items circling the neighborhoods waiting for orders to come in. Eventually we will get most of our groceries this way.

I find that using a credit card is the way to go with online purchases. You have buyer protection (something that most consumers are not aware of) and you can also (after making a reasonable effort to work it out with the seller) cancel a credit card purchase if you are unsatisfied with the product or feel you were swindled. Try doing that if you paid in cash.

The trouble with credit cards of course is that if you do not pay the monthly balance in full, interest rates kick in for the carryover balance. But if you are in the habit of paying down your balance monthly, it's not an issue and I certainly wouldn't call it "kicking the payment can down the road".

The manufacturers went, and maybe are still going, on a binge of taking a simple product and making multiple variations of it.

That's called extending a brand - or brand extensions. I agree it's gotten rather ridiculous. Even Oreo cookies now come in different colors and flavors. Watermelon Oreos? Seriously?

However, it has proven to be an effective way for businesses to wring additional revenues out of a long-standing product category while squeezing competitors off the shelf.

I can quickly find what I want on the internet. The brick and mortar stores are great for displaying products I may not know about or trying on clothes. Once I find clothes online that fit like at Landsend or L.L.Bean I order thru them.

#34 A co-worker showed me printouts from the post office that scans all of his mail, even the loose advertising. He said you can sign up to see if you get all the mail they scanned is delivered.

#53 I too bought online a remote plus an extra for my LG tv. I was surprised at how inexpensive they are.

#85 Circuit City had sales people who got commissions then the board hired a Best Buy exec who did away with them and lowered salaries. They went out of business.

#88 I need wide shoes because as a kid I went to the circus and the elephants stepped on my feet... I cannot locate any tennis shoes at brick and mortar stores that are wide widths.

Not having read the article since I don't go to CNBC.com, it wouldn't surprise me to find there is not one mention of a major change that's impacting all retailers from ma-and-pas up to the major chains.

That would be state and local governments imposing a higher minimum wage, presumably to the benefit of workers trying to support a family -- which is a ruse, but Americans have been sold worse ruses in the last twenty-five years.

Department stores rely on a staff of low-wage clerks/salespeople to assist customers in selecting clothing, shoes, accessories, hardware, household goods, etc.

When wages are pushed up by government edict, retailers have a choice: either raise prices or lay off employees.

To stay competitive, what would you do? Keep all your employees and make your customers pay more for their purchases or, alternatively, reduce your staffing level and hope nobody will notice.

My guess is that to stay competitive on prices with on-line merchants, a number of retailers did the latter: Penney's, Macy's, Sears, Win-Dixie, Bebe and probably others.

And there will be more to come once the higher minimum wage takes its inevitable toll. There's no free lunch.

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