“Retail Apocalypse”: A Look Back
Never let a good tagline get in the way of the truth
If you believed the headlines of 2016-2017, we shouldn’t be here. The Oxford English Dictionary refers to the Apocalypse as the final destruction of the world as described in the book of Revelation. According to the headlines, retail should be dead. Hmm, Suprise! Not only is US retail alive, since 2016 to today, but Retail (ex Autos) has grown from $3.6 trillion to $5.7 trillion in 2024. That’s $2.1 trillion more if my math is correct. In the immortal words from the movie Cool Runnings… “You dead yet? No Mon!”
The Birth of the “Retail Apocalypse” Myth
How Poor Treatment of Good Research Created a False Crisis
Eight years ago this month, certain media outlets seized upon findings from a reputable analyst study and combined them with significant store closing announcements from major retailers—particularly in the department store and specialty softgoods segments. Without doing the necessary homework to fully understand the research scope, they pulled the “if it bleeds, it leads” card, labeled it the “Retail Apocalypse,” and birthed a narrative claiming: “Stores are history, retail is toast, and e-commerce is going to take over the world.”
The Fatal Flaw in the Headline
The problem wasn’t the quality of the original research—it was excellent within its parameters. The issue was scope limitation. The analyst firm provided deep research on:
- Public and large private department stores
- Specialty apparel retailers
- Supercenters and warehouse clubs
However, it had less focus on other segments and smaller retailers that happened to be expanding rapidly at the same time. While the research was comprehensive within its scope, it was incomplete as a proxy for all of retail. Many media outlets were more than happy to overlook this critical detail in their race to publish first.
Setting the Record Straight: The Complete Industry Picture
Comprehensive Analysis Reveals the Truth
Fortunately, IHL Group, along with a small cadre of other analysts, didn’t accept this narrative and went about setting the record straight. We examined actual store counts for 2016 and forecast store counts for 2017 for more than 1,000 retail and restaurant banners—all with 50+ locations across 10 different retail segments. These retailers account for the lion’s share of IT spending in the industry.
The Real 2017 Store Activity Data
What We Actually Found:
- Mall-based retailers (mainly department stores and softgoods/apparel retailers) were indeed seeing massive store closings
- FDCM retailers (Food/Grocery, Drug Stores, Convenience Stores, Mass Merchants, and Supercenters/Warehouse Clubs) were opening thousands more stores than they were closing
- Restaurants were also opening thousands more locations than they were closing
Bottom Line: By not doing their homework, the media didn’t just miss that it was mainly mall-based retailers in trouble—they also sowed fear, uncertainty, and doubt on a grand scale. The reality is that the retail industry was significantly healthier than it was given credit for. But let’s not let the truth get in the way of a good headline.
Visual Evidence: The Data Tells the Real Story
Why the “Retail Apocalypse” Narrative Was So Damaging
1. Strategic Store Closures Are A Normal Business Practice
Closing stores is not necessarily a bad thing. Healthy retailers should annually review each store’s performance in their chain. For underperforming locations, retailers can choose to either invest more to enhance performance or close them and redeploy resources to other stores. This is smart business management, not industry decline.
2. False Narratives Create Real Economic Consequences
A narrative like the “Retail Apocalypse” can take on a life of its own. While the predicted doom and gloom didn’t materialize, it did create unnecessary panic among:
- Workers concerned about job security
- Investors making decisions based on incomplete information
- Communities worried about local economic stability
The constant stream of negative news fostered fear, uncertainty, and doubt about the stability of jobs, communities, and livelihoods.
3. Company-Specific Issues, Not Industry-Wide Problems
Critical Finding: The majority of store closings in 2017 were due to a relatively small number of retailers. For example, 16 companies were responsible for 54% of all store closures that year.
Contrary to media speculation, there was no issue endemic to the retail industry causing the closures. Rather, there were systemic issues within each struggling retailer:
Root Causes of Retailer Failures:
a. Outdated Business Models
Business strategies that hadn’t been updated in years
b. Unsustainable Expansion
The “it worked for 50 stores, why not 500?” mentality
c. Financial Pressures
VC involvement and cheap money (near-zero interest rates) resulted in short-term “expand and get out” strategies
d. Demographic Displacement
When most shopping malls were built in the 1970s, the largest portion of economic power resided with the middle class. Malls were constructed near where the middle class lived, worked and played. Over time:
- Middle-class families moved upstream and away
- Lower socio-economic families moved into former middle-class areas
- Economic power shifted upstream as well, away from malls
- Anchor tenants faced declining traffic and revenue
4. Media Ignored Retail Industry Growth and Resilience
In pursuing their apocalyptic narrative, the media never addressed the growth and resilience of the US retail industry:
2017 Growth Metrics:
- Retail sales grew 4.1% over 2016
- Added the equivalent of Italy’s entire retail GDP
- Successfully adapted to e-commerce, labor issues, PCI compliance, COVID, supply chain disruptions, VC impacts, inflation, recession, and numerous other challenges
The retail industry as a whole has done a remarkable job responding to these issues—they just didn’t receive media credit for their resilience.
Eight Years Later: The Complete Performance Picture
Overall Industry Health (2016-2024)
IHL has continued tracking store count data for North American retailers with 50+ locations. Since 2016, store counts across all 10 retail segments have declined only 0.7%—a minimal change that includes COVID-related impacts.
When broken out by segments:
- GMS segments: 10.9% decline (18,000+ stores)
- FDCM: 5.1% growth (7,100+ stores)
- Restaurants: 4.0% growth (7,600+ stores)
Detailed Segment Performance (2016-2024)
| Retail Segment | Net Store Growth 2016-2024 | Retail Sales Growth 2016-2024 | Net Store Growth Since COVID |
|---|---|---|---|
| Food/Grocery | ~1,500 stores (7.5%) | $1,000B (43.1%) | ~680 |
| Superstores/Warehouse Clubs | 114 stores (2.1%) | $668B (48.5%) | 53 |
| Mass Merchants | ~7,000 stores (19.1%) | $40B (23.6%) | ~3,600 |
| Convenience Stores | ~4,000 stores (10.5%) | $209B (49.5%) | ~2,100 |
| QSR/Fast Food | ~8,000 stores (5.0%) | $226B (78.0%) | ~5,000 |
Looking Ahead: AI and Continued Retail Evolution
The Next Transformation Wave
We expect to see a significant impact of AI on retail operations:
Successful Retailers: Those who have navigated recent challenges have also been preparing their data infrastructure for AI implementation. They will experience:
- Enhanced operational efficiencies
- Resulting growth in retail sales and profitability
- Competitive advantages through data-driven insights
Retailers at Risk: Those who just barely survived recent challenges are at a crossroads. They can either:
- Invest in data preparation and AI readiness to experience growth benefits
- Do nothing and risk appearing on future lists of failed retailers
Conclusion: The Real Retail Story – Resilience
The “Retail Apocalypse” narrative serves as a powerful case study in how the press will take incomplete data analysis and create harmful false narratives – even when it is not political in nature. While certain retail segments faced legitimate challenges, the overall industry demonstrated remarkable resilience, adaptability, and growth.
The Truth: American retail didn’t experience an apocalypse—it experienced strategic evolution. Successful retailers adapted their strategies, optimized operations, and continued serving customers effectively across multiple channels.
The Data Proves It: Eight years of comprehensive analysis shows that reports of retail’s death have been greatly exaggerated. The industry’s continued growth in sales and strategic expansion in key segments demonstrates the fundamental health that media narratives obscured.
As retailers continue evolving with AI integration and changing consumer preferences, the industry’s track record of successful adaptation through previous disruptions suggests continued resilience ahead.
This analysis is based on comprehensive research tracking over 1,000 retail and restaurant banners across 10 retail segments from 2016-2024, conducted by IHL Group.
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