[Puffer Fish]

I just saw yet another retail store go out of business, and immediately in my mind I wondered whether consumer spending has really recovered from the Recession, so I decided to do a little bit of rough calculations.

source for US retail sales by year found here: https://www.multpl.com/us-retail-sales/table/by-year

Jan 1, 2019
$507.22 billion
329.45 million population

$1539.59 per capita


Jan 1, 2002
283.51 billion
287.6 million population

$985.77 per capita


Now we have to take into account inflation. According to a quick inflation calculator,
what cost $985 in 2002 would cost $1427.17 in 2019.

So overall, I calculate that per capita retail sales went up 7.8 percent between 2002 and 2019.

So it appears that retail spending really is up. This is per capita (meaning for each person, on average).

Thus I am really puzzled why retailers are still going out of business.
(I don't buy that it's mostly due to online retailing)

I would point out though that 7.8 percent over 17 years is not a lot of growth. That means there could be more subtle factors at play.

[Puffer Fish]

Some retailers have cited rising rents as the reason they are having problems.
I could understand why that might make it more difficult for new retail stores to open, but do not really see how rising rents could be a factor making it more difficult for existing retail stores. After all, why would rents be rising that much?

Could it perhaps have to do with assessed property values?
Due to a shortage of surrounding housing, the property that the retail store is on gets assessed at a higher value, even though there's no shortage of retail space?

If so, this might have something to do with an interaction between taxation on the economy. More people -> housing shortage -> rising housing prices -> higher tax assessments on both residential and commercial properties -> higher rents -> lower profit margins for retail business

It would also help explain why online retailing has grown in popularity, as the online retailer can be located far away from where the market is, without the high property prices and expense that would be required to be located near where the consumer money is.

Indeed, I suspect the rise of online purchases has as much to do with the geographic concentration of consumer spending as it does with technology.

[Raptor-Con]

Basically,

It's up for the moment, but then Amazon will say or do something, and their stock will come crashing down even harder. Sadly, that's just the way it is. Survival of the fittest. If your business can't adapt to changing consumer tastes (in this way, the rise of internet shopping), then your business must fall, no matter how great you once were.

And sadly, retail is a dangerous game to begin with, so it doesn't surprise me that there being hit the hardest, no.