The death of the department store and the American middle class

[Tellugodu]

Hope American take STEM education seriously and reform the schooling system. If not it will be a major problem for middle class young Americans.

The collapse of America’s middle class crushed department stores. Amazon and the pandemic are the final blows.

By Jason Del Rey@DelRey  Nov 30, 2020, 7:00am EST

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In a New Jersey suburb seven miles west of Midtown Manhattan, the American Dream is on shaky ground.

The Dream in question isn’t the mythological notion that upward social mobility is within reach for all hard-working Americans. It’s a $5 billion, 3 million-square-foot shopping and entertainment complex in East Rutherford featuring an indoor ski slope, an ice-skating rink, and a Nickelodeon-branded amusement park. The complex finally opened last fall, but it’s now facing huge new challenges.

The development’s complicated 17-year history, marked by ownership changes, false starts, and broken promises, had already put American Dream in a precarious situation. The Covid-19pandemic hitting in March made things much worse. Whether the mall makes it in the long term will hinge in part on how it deals with the collapse of three of the marquee department stores that were to anchor the complex and draw foot traffic — Barneys New York, Lord & Taylor, and Century 21 — which all have gone bankrupt and closed, or are planning to close all their stores in the US.

Around 100 storefronts in American Dream opened their doors to customers in October and November, but the complex’s future is not guaranteed. Its owners, Triple Five Group, missed several mortgage payments this summer, and it’s not clear who might fill the enormous holes left by the three fallen department store chains, or which other retail tenants will opt out of their leases now that the development is missing three of its anchors. 

While the story of American Dream is unique in many ways, its struggles are emblematic of the bleak future facing many US malls and department stores — whose destinies have long been intertwined. The downfall of these once-crown jewels of retail will have meaningful impacts on the Americans who work for them and the communities they’ve long called home.

More than half of all mall-based department stores will close by the end of 2021

Across the US, department stores are shrinking or shuttering altogether. In 2011, US department stores employed 1.2 million employees across 8,600 stores, according to estimates from the research firm IBISWorld. But in 2020, there are now fewer than 700,000 employees in the sector, working across just over 6,000 locations. 

The reasons for the struggles are both shared and unique. Since the Great Recession began in late 2007, the vast majority of income growth in the US has gone to high-income households, squeezing middle-class households and altering where they spend money. As a result, chains that sell brands at sharp discounts like TJ Maxx, Ross, and Dollar General have become more popular, siphoning away shoppers from full-price department stores like Macy’s and J.C. Penney that were designed to cater to a stronger middle class of yesteryear.

Department stores are also facing the reality that they are no longer the main way most shoppers discover or access new brands — which was once perhaps their main appeal as one-time innovators. Consumer brands have increasingly become focused on building connections with customers through their own stores, websites, social media platforms, and other online-only marketplaces. 

All the while, department stores’ contraction is upending local labor markets and the communities they called home. And rock bottom is not even here yet. More than half of all mall-based department stores will close by the end of 2021, according to estimates by Green Street Advisors, a commercial property research firm. And that will have a massive impact on malls; as of January, department stores accounted for nearly one out of every three square feet in malls. 

“The department store genre has been taking the great American shopping mall down with it, slowly but inevitably,” said Mark Cohen, the director of retail studies at Columbia University who was previously the CEO of multiple department store chains in the US and Canada.

What happens when an entire sector of retail, one that employs more than half a million people, is in free fall — and is slowing or dragging down shopping malls like the American Dream with it? And what becomes of the local communities across the country whose social identities and local economies rested on, at least in part, now-fallen department stores and the malls they buttressed? We’re about to find out.

What’s killing the department store

For much of the last century, US department store chains played an important role in many Americans’ lives and an innovative role in the retail sector. 

For the American middle class of the 20th century, department stores helped shape what successfully living the American dream looked like. These stores were often an entry point into fashion and home furnishing trends once reserved for only the wealthiest, since they offered large selections of name brands at affordable prices all under one roof — first in big cities, and then following population exoduses out to the suburbs. And as the main attractions for malls in the suburban US, they played a foundational role in the idea of shopping as a social activity in the second half of the 20th century. 

Department store employees also had it pretty good, for a time. The sector was welcoming to women salespeople, providing a path to certain corporate roles for those who found success, according to the book From Main Street to Mall: The Rise and Fall of the American Department Store. A successful salesperson working in one of these stores, especially before large chains came to dominate the sector, could make a career of their role, providing for their family, no college degree needed. Those days are mostly long gone.

Since the Great Recession began in 2007, the middle 40 percent of the US saw its income shrink

But over the last two decades, a confluence of other factors has placed several giants on death’s door and put even the most innovative in a precarious situation. These factors were both external and internal: Amazon led a boom in online shopping, and many brands that once relied on department stores began selling directly to customers online and in their own stores. Meanwhile, many department store chains made the wrong bets, investing more heavily in store expansion while underinvesting in merchandise differentiation and e-commerce strategies. 

But perhaps most critically for the chains targeting the middle class — think Macy’s, J.C. Penney, and Bon-Ton — this category of households has been struggling since the Great Recession began in 2007. According to a 2018 study from consulting firm Deloitte, “the middle 40 percent” of the country saw its income shrink in the previous decade, while more than $8 out of every $10 in income growth nationwide went to high-income households. As a result, discount chains that sell name brands at a bargain — like TJ Maxx and Ross stores — became much more attractive to middle-class shoppers than department stores selling at full price. The treasure-hunting aspect of stores like TJ Maxx and Home Goods also added to their appeal over many of their department store competitors. Macy’s, the largest traditional department store in the country, said earlier this year that it planned to close 125 of its 800-plus stores — and that was before the pandemic. 

But department stores catering to wealthier customers have failed, too. In addition to Sears and J.C. Penney, higher-end stores Barneys New York, Lord & Taylor, and Neiman Marcus have all filed for bankruptcy in the last two years. Even Nordstrom, viewed by industry insiders as the most progressive traditional department store chain, is facing significant headwinds. While overall US e-commerce sales increased 45 percent year over year from April to June as pandemic shutdowns pushed more shoppers online, Nordstrom registered just 20 percent growth in online sales.

As more Americans came online and as social media platforms rose in popularity, brands started establishing direct relationships online and through their own stores, which chipped away at their reliance on department stores for finding customers. For a while, department stores still could provide a way to reach mostly older consumers who preferred in-person shopping or others who didn’t have internet access, but the chains became more complementary for popular brands rather than remaining a crucial sales channel. 

More mid-priced brands such as Levi’s and Adidas started selling on Amazon and other online marketplaces as department stores targeting the middle class started to struggle, meaning chains like Macy’s now had serious online competition, too. And since Amazon and other top online retailers are in many cases more convenient than visiting a large store where salespeople are trained and paid less than they once were, department store advantages further diminished.

Finally, some private equity companies — investment firms that buy up struggling companies in part by saddling them with debt — have taken aim at the sector, and the debt associated with their takeovers has hastened the demise of some department store chains like Neiman Marcus. The Dallas-based luxury chain filed for bankruptcy earlier this year under crushing debt from its PE owner. The chain was also late to e-commerce — when it finally started getting aggressive around 2014, introducing free shipping and returns to better compete with Nordstrom, it didn’t work and instead crimped its profits. The company’s bottom line was also hurt by some of the biggest brands it sells moving from a wholesale model to a more flexible and lower-risk model that was less profitable for Neiman Marcus. While a private equity owner didn’t force these moves, the fallout from these crises coupled with a heavy debt burden was a recipe for disaster.

How the decline of department stores is reshaping communities

While the pandemic has accelerated contraction of the department store industry, the sector has been in a slow descent for decades. And the communities they call home, which experienced the upside of their presence during the golden years, are now faced with a series of cascading challenges.

“First they become an eyesore; it’s aesthetically damaging,” said Vicki Howard, the author of From Main Street to Mall. “Second, there’s the jobs. … Third, it impacts the consumers themselves that have turned to that area for leisure activities, for places to go in the winter, to go with their kids.”

 

 

 

[veerigadu]

Capitalism is at its vicious best in vomerica. Inka assameeee

[kakatiya]

Millennial s are not spending their $$$ on clothing and new vehicles.. rather they love to spend travelling and eating outside with their dates..or gaming dates 

[veerigadu]

16 minutes ago, kakatiya said:

Millennial s are not spending their $$$ on clothing and new vehicles.. rather they love to spend travelling and eating outside with their dates..or gaming dates 

Most educated millenials of vomerica are soaking wet in student debt. Inka housing and vehicles are beyond the stretch of their imagination. In all honesty, vomericans here phaaahake petti 70$ per hour job right after college kottaleru gaaa....

[tom bhayya]

at least 30% of restaurants won't survive this winter 

[Tellugodu]

20 minutes ago, veerigadu said:

Most educated millenials of vomerica are soaking wet in student debt. Inka housing and vehicles are beyond the stretch of their imagination. In all honesty, vomericans here phaaahake petti 70$ per hour job right after college kottaleru gaaa....

I have a dream/hope to see one day they get the STEM jobs they deserve. I hope govts work to reform the education system to better equip them to the skills they needed for today’s work environment. I am sure IT skills can be trained and very soon more and more fellow Americans will come into the technology field. 

[tom bhayya]

1 minute ago, Tellugodu said:

I have a dream/hope to see one day they get the STEM jobs they deserve. I hope govts work to reform the education system to better equip them to the skills they needed for today’s work environment. I am sure IT skills can be trained and very soon more and more fellow Americans will come into the technology field. 

parayana free chaitanya should start here antaava 

[kakatiya]

37 minutes ago, veerigadu said:

Most educated millenials of vomerica are soaking wet in student debt. Inka housing and vehicles are beyond the stretch of their imagination. In all honesty, phaaahake petti 70$ per hour job right after college kottaleru gaaa....

New generation Desi master students are not going through these consultancies anymore..they are coming in as developers..and directly going for genuine jobs instead of consulting .... 

 

I have seen one Desi guy who came in master for arizona state university.. he is not from IIT in India just a regular univeristy..he got eb1 sponsor..

 

All I learnt from him is .new generation Desi students are developing some kind of application during and after bachelor's irrespective of what univeristy they go to .and they are selling it to customers as some kind of startup..from there they are keep in working on enhancing their skills developing new applications ...

Tesla and other california technology AI driven companies are hiring them and sponsoring.

 

 

[Mingutha]

7 minutes ago, Tellugodu said:

I have a dream/hope to see one day they get the STEM jobs they deserve. I hope govts work to reform the education system to better equip them to the skills they needed for today’s work environment. I am sure IT skills can be trained and very soon more and more fellow Americans will come into the technology field. 

nee dp ayindhi nayana. .  

anyway ne frankness chusi impress ayya 

[Dabbakai]

15 minutes ago, kakatiya said:

New generation Desi master students are not going through these consultancies anymore..they are coming in as developers..and directly going for genuine jobs instead of consulting .... 

 

I have seen one Desi guy who came in master for arizona state university.. he is not from IIT in India just a regular univeristy..he got eb1 sponsor..

 

All I learnt from him is .new generation Desi students are developing some kind of application during and after bachelor's irrespective of what univeristy they go to .and they are selling it to customers as some kind of startup..from there they are keep in working on enhancing their skills developing new applications ...

Tesla and other california technology AI driven companies are hiring them and sponsoring.

 

 

that's 1 in 100,

but other 99 go to central Missouri or NPU or SVU. 

 

[veerigadu]

26 minutes ago, kakatiya said:

New generation Desi master students are not going through these consultancies anymore..they are coming in as developers..and directly going for genuine jobs instead of consulting .... 

 

I have seen one Desi guy who came in master for arizona state university.. he is not from IIT in India just a regular univeristy..he got eb1 sponsor..

 

All I learnt from him is .new generation Desi students are developing some kind of application during and after bachelor's irrespective of what univeristy they go to .and they are selling it to customers as some kind of startup..from there they are keep in working on enhancing their skills developing new applications ...

Tesla and other california technology AI driven companies are hiring them and sponsoring.

 

 

one example kadhu oka 5 examples ivvagalava on top of your mind ???

[Tellugodu]

10 minutes ago, Dabbakai said:

that's 1 in 100,

but other 99 go to central Missouri or NPU or SVU. 

 

NPU and SVU telusu, kani ee central Missouri endi ?? Is it another diploma mill? Seems like public university kada.

[veerigadu]

3 minutes ago, Tellugodu said:

NPU and SVU telusu, kani ee central Missouri endi ?? Is it another diploma mill? Seems like public university kada.

Public universities lo kuda veasy peasy course work ani akkada join avtharu. 

CMU, TAMUK, Southern arkansas lo oka univ edho undhi. These are one of its kind in that aspect.  Its legal and nothing wrong with this universities. So I support our utttth in this decisions

[linksys23]

42 minutes ago, kakatiya said:

New generation Desi master students are not going through these consultancies anymore..they are coming in as developers..and directly going for genuine jobs instead of consulting .... 

 

I have seen one Desi guy who came in master for arizona state university.. he is not from IIT in India just a regular univeristy..he got eb1 sponsor..

 

All I learnt from him is .new generation Desi students are developing some kind of application during and after bachelor's irrespective of what univeristy they go to .and they are selling it to customers as some kind of startup..from there they are keep in working on enhancing their skills developing new applications ...

Tesla and other california technology AI driven companies are hiring them and sponsoring.

 

 

not all are talented to get full time H1... 80 % PUBLIC have no jobs..only idly dosa jobs with consultancy..ammayilu ke  the enno options bayya..antey pelli chesukuni settle avutaru..boys story is different

[Tellugodu]

18 minutes ago, veerigadu said:

Public universities lo kuda veasy peasy course work ani akkada join avtharu. 

CMU, TAMUK, Southern arkansas lo oka univ edho undhi. These are one of its kind in that aspect.  Its legal and nothing wrong with this universities. So I support our utttth in this decisions

Better then SUV and NPU antav. So just weekly oka assignment submit cheste saripondi kada in those public universities?? Rest of the time utttth relax avthara??