If you could hear worry, the noise coming from retail department stores would be deafening. Big name stores that once drew customers from miles around are battling to avoid becoming the next victims of changing consumer behavior.
This is despite new Commerce Department April figures showing the strongest U.S. consumer spending in a year. For brick-and-mortar retailers, the good news is overshadowed by a widening gap between online and in-person sales.
The April sales figures show a 1.3 percent spike in overall retail sales over March's figures.
However, the online sector, which includes Amazon and its competitors, rocketed higher by 2.4 percent. Over the last year, department store sales have fallen by 1.7 percent as Internet and catalog sales climbed 10.2 percent.
Let's face it, fellow Americans: We are killing the retail stores which up until now have defined American prosperity and neighborhoods, and we're killing them at breakneck speed.
The latest, lamentable quarterly reports from Nordstrom, Kohl's, Macy's and other major retailers reveal cratering revenues and profits. Gap announced it might close more stores in response to sinking sales, which will inevitably lead to layoffs. J.C. Penney plans to combat disappointing sales by adding home goods and appliances to its stores.
Amazon.com is eating the department stores' lunch. Morgan Stanley reports that the huge online retailer is ranked second only to Walmart for apparel sales. The scene is reminiscent of the job Amazon did on bookstores, record stores and hardware stores, which are have largely disappeared from most American communities.
Dumbfounded executives at the large retail companies are at odds explaining the reasons for the prolonged slump in sales.
Some say that consumers are spending more money on items not sold at department stores, such as travel and entertainment services. Grocery shopping is another retail space in which department stores don't have a large market share. Others blame the drought on decimated mall traffic.
For once, economists were more upbeat than old-school retailers, as the new figures foster some optimism that consumers will keep the U.S. economy moving forward. After all, consumer spending accounts for greater than 2/3 of American economic output.
The economy sputtered in the first quarter of 2016 partially due to reduced consumer spending, which was rising at a weak 0.5 percent annual rate, seasonally adjusted.
One firm that produces economic forecasts, Macroeconomic Advisors, boosted its expected GDP growth for Q2 2016 from 2 percent to 2.3 percent, annualized. Barclays bank is predicting 2.2 percent annualized growth, up from its previous forecast of 2 percent. Atlanta's Federal Reserve Bank has the economy growing at a 2.8 percent clip, versus its earlier 2.2 percent estimate.
Online stores have replaced physical retailers as bellwethers for U.S. economic growth. For one thing, Internet retailers can service the entire nation without relying on a location's local economic fortunes.
The adage, "if you can't beat them, join them" certainly applies to the retailers that are beefing up their e-commerce operations. Nordstrom, an operator of high-class department stores, now makes 20 percent of its sales online and discounts aggressively at its shopping-mall locations.
Meanwhile, Amazon's quarterly sales rocketed up 28 percent, the fourth consecutive profitable quarter. Some of the large box stores, such as Home Depot and Lowe's, are expected to announce strong earnings this week, thanks to a robust housing market that encourages spending on renovations, appliances and home items.
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