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The 1.5 Horsemen of the Retail Apocalypse

Empty mall in Waterbury, Connecticut. A nearly—nearly—empty shopping mall on March 28, in Waterbury, Connecticut.

Spencer Platt/Getty Images

How apocalyptic is the retail apocalypse? A rash of store closings and the second straight month of steep retail job losses may have left the impression that America’s shopping centers are about to collapse in anticipation of the seventh seal. There’s certainly cause for concern over the geographic impacts of these closings, not to mention the political nonresponse to them at a time when the president is still crowing over the barely significant coal industry. As big-box chains and department stores close outposts, the sector is clearly shrinking its footprint and potentially removing a big source of demand for labor. More than 15.8 million Americans—about 13 percent of those with private-sector jobs—work in retail.

But in the larger scheme, the retail apocalypse may be more of a medium-high tidal wave. My colleague Jordan Weissmann tweeted out a chart showing long-term growth in retail employment, which looks pretty good. And from the economic nadir of November 2009, even as e-commerce has hoovered up market share and many chains have shrunk, total retail jobs have risen by 1.49 million, or 10.3 percent. In the same time period, all payroll jobs have grown by about 12 percent.

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Overall, then, retail employment looks pretty nonapocalyptic. As some chains loudly go out of business, liquidate, or close stores, smaller chains expand to pick up the slack. Moreover, retail is a big and highly varied sector. It consists of some segments that are essentially immune to e-commerce and shifts in consumption patterns, and others for whom the same shifts will spell doom.

So which categories of retail are about to be trampled by the four horsemen, and which are still enjoying a pleasant economic ride?

The Bureau of Labor Statistics’ data highlight several different sectors within retail whose fortunes vary when it comes to employment. Take the auto retailing sector, which is the largest single retail sector by dollar value and accounts for about 13 percent of total retail employment. Americans overwhelmingly prefer to buy new and used cars from brick-and-mortar car dealers. Employment in this segment was up nearly 2 percent in March 2017 from March 2016.

Gas stations may ultimately be disintermediated by home-charging stations, if electric cars ever catch on. But neither Amazon nor any other online retailer will be able to siphon off sales from this sector in the near future. Gasoline stations in March 2017 collectively employed 937,000 Americans—up 1.8 percent from last year.

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You can order sectionals, recliners, and other home goods from online retailers. But when purchasing large objects that will help define their homes, most shoppers prefer to do so in person. Employment at furniture and home-furnishing stores rose three percent between March 2016 and March 2017.

In some other very large sectors, brick-and-mortar is holding its own against the seemingly inexorable rise of e-commerce. Yes, more and more people are using Peapod, food-subscription services, and Amazon for their sustenance. (These wonderful Biscoff cookies are my new jam, and they can be summoned to my door with a simple push of a button.) Food and beverage stores employed nearly 3.1 million Americans in March 2017, up 0.5 percent from a year ago. Oh, and employment at health and personal care stores is up about 1 percent in the past year.

So where precisely is the retail apocalypse happening? Where is the financial and human carnage piling up? It seems to be happening mostly in large retailing boxes that sell apparel, equipment, electronics, and specialty goods.

Overall employment in clothing stores has held up well. But we know that department stores like JCPenney and Macy’s have been suffering and shrinking. In the past year, department stores—the anchor tenants of many malls—have shed a total of 39,000 jobs, or 3 percent of their total. And it’s likely that a considerable number of the remaining 1.27 million department-store jobs could be at risk.

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Radio Shack has been one of the more ubiquitous casualties of the current retail environment; the chain is closing 552 stores . Clearly, people who buy electronics and appliances are increasingly more comfortable and likely to do so online. In the past year, this subsector has shed 11,000 jobs, or 2 percent of the total.

Then there are the woe-begotten big-box chains that specialize in other products. In the 1990s and 2000s, chains like Dick’s Sporting Goods and Barnes & Noble became fixtures at malls and shopping centers. But now, again, in large part thanks to the rise of e-commerce in their categories, they are shrinking. In the past year, the worst-performing retail segment from an employment perspective has been “sporting goods, hobby, book and music stores.” Between March 2016 and March 2017, this segment cut 25,000 jobs, or 4 percent of the total.

These figures may not sound like much. Losing 4 percent of total positions is hardly apocalyptic. But context matters. We are in an extended period of robust jobs growth. Between March 2016 and March 2017, the economy added nearly 2.2 million jobs. And thanks in part to the hardy jobs market, overall retail sales in March 2017 were up an impressive 5 percent from the year before. In this climate, a generic retailer should be adding jobs at a decent clip, and there are hundreds of thousands of open retail positions. So if you’re actually reducing positions by a meaningful number, that means your business must be really suffering.

Right now, of course, the impact on jobs isn’t what makes the shifts in retailing scary. Because there is a lot of leverage built into the system, failures are magnified and ripple throughout the economy. When a big chain fails or liquidates, it fires a bunch of retail employees—many of whom, in this economy, will be able to find other work quickly. But a failed store also defaults on its debts, or stops making lease payments (which makes it harder for landlords to keep up with their own debts), reduces foot traffic for neighboring stores, and often winds up stiffing suppliers. It’s that potential of faltering retailers to create damage in sectors outside of retailing that should keep people up at night.

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