6 crises that push giant American stores to flee from major cities

6 crises that push giant American stores to flee from major cities
6 crises that push giant American stores to flee from major cities

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America’s economy

Growing concerns about the future of retail

Cairo – Al Arabiya.net

Published in: May 18, 2023: 12:51 PM GST
Last updated: May 18, 2023: 02:11 PM GST

Major chains including Wal-Mart and Starbucks closed stores in major US cities recently, raising concerns about the future of retail in some of the country’s most prominent business districts. Where Crisis 6 pushes massive chains out of some city centres.

These crises are an oversupply of stores, people working from home, the expansion of online shopping, exorbitant rents, crime and public safety concerns, and finally the difficulty of hiring workers.

To reinvent downtown retail, radical changes may be required. That means denser neighborhoods with a broader mix of affordable housing, experiential retail, restaurants, entertainment, parks and other amenities, which won’t happen overnight.

“Once these cities become truly metropolitan neighborhoods, we’ll see retail start coming back in different ways and shapes,” says Terry Shock, co-founder of consulting firm Shock Kelly, according to CNN. How policymakers reshape the city center – with retail a critical attraction – will be critical to the financial health of cities and regional economies.

A number of US fiscal and monetary policymakers have cited crime as a major reason for the closure, following videos of shoplifting incidents. “We’re losing chain stores that are closing down… The people who are employed in those stores are losing their jobs because of crime… But the impact of shoplifting can be exaggerated in some cases,” says New York City Mayor Eric Adams.

In a recent statement, Walgreens said it had seen a spike in losses, known as deflation, during the pandemic and cited organized retail crime in its decision to close five stores in San Francisco in 2021. But it has eased recently. “We may have cried a lot last year about fewer numbers,” a company official said.

Rather than being strongly associated with crime rates, lockdowns are not a recent phenomenon either. San Francisco, Los Angeles, San Diego, New York, Seattle, Miami and Chicago lost retail stores from the beginning of 2017 to the end of 2021, according to research from JPMorgan Chase. Moreover, experts agree that lockdowns are not just about crime. Several trends have converged to put these stores at risk.

But perhaps the most important thing is the abundance of stores in America. According to Morgan Stanley, from 1995 to 2021, more stores closed each year than opened so this trend became popular as the “retail apocalypse”. So while big city lockdowns may attract national attention, they are in fact often part of the brand’s nationwide lockdowns.

“The retail logic of large organizations is much weaker than it was 20 or even 10 years ago,” says David Dixon, principal at Stantech, a global design firm. For example, Wal-Mart has closed about 40 stores since 2021 and will close 20 this year. Nordstrom will close 15 locations in 2023. In 2021, CVS announced that it will close 900 stores over three years.

Even in stores still in the city centre, fewer people are often shopping. This is one of the main factors of the transformation caused by the epidemic. Between 2019 and 2021, the number of people working from home essentially tripled from about 9 million to 27.6 million, according to the US Census Bureau.

The advent of remote work has decimated downtown shopping districts, which were designed to cater to office workers commuting daily. The typical office worker now spends about $2,000 to $4,600 less annually in city centers, according to the Stanford University Research Unit. The research indicated that this spending is being transferred to the suburbs, where a million people also left city centers during the pandemic.

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