American Retail Apocalypse?
What is happening with American retail stores these days? I've seen a number of closures of some of the coolest shops around where I live, only to be replaced by some huge corporate retail garbage. All across America the brick and mortar model is dying, replaced by online retailers like Amazon, et al... Is the Average American aware of this? It seems blatantly obvious but maybe the average American is too "busy" with their nose in their phone to take notice? Or perhaps they think this is just the future?
I was recently in Dublin Ireland, and walking around the streets, I noticed how absolutely full of retail it was. Huge sections of the city, block after block of thriving retail shops. Then in other major cities in Ireland as I traveled around, I noticed the same thing. Strong, thriving retail, among great cafe's and restaurants. Among the thriving retail scene I saw in every major city in Ireland, I noticed something I haven't seen in America in some time, book stores, and a lot of them! And they were full of customers flipping through and lining up to buy books. WOW! This is very different from what I have seen in the last 10 years in the USA.
Every where I look in America these days, and I have toured the country, I see the same old corporate "Made in China" business', and when it comes to cool eclectic boutiques, they are very hard to find, and few and far between. Even through Google searches, they always seem to turn up the big corporate chains who have the biggest budgets to throw at website search engine discovery and advertising.
I have had a number of stores, (The cool eclectic men's boutiques) in the last 2 years fold, and close down. These stores were cool. The type of place that offers the kind stuff you don't find in typical shopping malls, Banana Republic, Old Navy, etc, etc... An awesome collection of random clothing brands, accessories, (And I'm not gloating about my products) assembled and curated by a buyer with amazing taste.
As I have dealt with each of these stores, Ive come to realize that the bulk of the stores that are surviving, are the ones that manufacture and sell their own products. This isn't the case 100% of the time, but for the most part, these are the stores that are thriving. The Banana Republic's, Yankee Candle Co. Gap, Zales, etc. And unless you are a huge store, with tens of thousands of different items in your inventory (Walmart, Target, etc) your overhead-profit ratio isn't right to survive.
In my operation as a jeweler, I wholesale to my few remaining stores. Which means that they need a markup of a certain percentage. And that percentage is huge! When you buy my product from one of my stores, that store is making more money than me on the product that I designed, and manufactured here in Nashville Tennessee. Usually they are asking for 250% markup on my price. In order to keep the wholesale beast working, I have to then list that same price on my website, so as to "not compete" with the stores, who would otherwise not be interested in doing business with me.
At this point of the American Retail Apocalypse, I wonder if it is worth it anymore to wholesale to anyone, or if I should just drop my prices, (And remaing stores selling my products) and offer direct to consumer sales, and make a little more on my end of the deal.
With the cost of living in American cities always going up, wages must go up, which means the cost of production goes up. That coupled with quarterly tax returns to the city, quarterly returns to the state, annual federal taxes, business, materials and manufacturing costs, promotions, et al, is it any wonder that American retail is suffering? These stores want to make 2.5 times their investment (As a minimum) on every item, which means, in the end, that the cool stores loose to the corporate garbage that dominates retail in this country. Because to manufacture, and sell direct, is the only last way to go. Unless of course you can manufacture in China, cheap enough to keep all your margins in the black.
The next decade in the USA will be very interesting to see unfold...
