Beware of Retail’s Heresy
Often used as to discuss religion, at its core the word heresy is a “truth about something that is taken to an untruthful extreme.” History is rife with examples of a principle or discovery for one thing that was then extended to an area it was never meant to be and was found to not to stand up to the full scrutiny because it was taken too far.
This is the case with the mainstream news when it comes to the state of retail. If we step back, we all can see that our journalism has changed. We are far from the deep, investigative journalism that was focused on finding the truth and which was funded by subscribers. There may have been bias (and even censorship), but ultimately those journalists depended on paid subscribers (and print advertisers) for their readership and pay. Today things are quite different and these news sources are nearly fully funded by web-based advertisements and page views. To get these up, the organizations sensationalize the headlines and often the news stories themselves.
Fear sells…just as sex sells, generating nearly 10x the clicks of a standard story. Just read Michael Crichton’s excellent book called “State of Fear” for a great overview of the impact of media fear on consumer behavior. Or Bill Gates’s recent tweet that shows how the causes of death from suicide, homicide, and terrorism make up less than 6% of all US deaths but get nearly 70% off all coverage on causes of death in the New York Times. (see below)
Which brings us to the “Retail Apocalypse” narrative. What IS true is apparel and department stores are struggling and have closed numerous stores. In fact, Department Stores have closed 20% of their stores since the end of 2016 and Specialty Apparel has seen a drop of 13% of stores in that same period. There are many reasons for why and most have to do with too much debt, over expansion, short-sighted private equity and lack of innovation. In other words, some poor business practices in the wake of changing consumer taste and demographics.
But even so, Specialty Soft Goods and Departments Stores do not comprise the total of retail. This is where the truth of the challenges in two segments become untruthful when extrapolated to all of retail.
For what is ALSO TRUE is every other retail segment is growing and healthy. The truth: Department Stores and Apparel retailers have closed a net 9,651 stores since January 2017. But also true the other segments have added stores at nearly 2x the pace of these closures with 18,226 stores opening.
Yet this last part of the net gain of retail never makes the mainstream news! Because why let the truth interfere with a good story (or headline that gets clicks?) Thus they continue to propagate this falsehood.
Further, of the 1,660 retailers with 50 or more stores in the US that IHL recently researched, 20 companies made up 75.1% of all reported closings. That means 1.2% of the chains made up 75.1% of all the announced closures for 2019. Hardly an apocalypse.
So beware of this heresy in retail news. Dig deeper. Retail is much broader than Apparel and Department Stores.
For complete research, webinar slides and such that we offer for free, click here.
Bill Gate’s Tweet.