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The End Of The Retail Industry As We Know It Today
Francesco Abbruzzino, The Uncensored Report, LLC
Will this be the last “somewhat normal” holiday season for U.S. retailers? Normally, the holiday season is the most profitable time of the year for our retailers, but it has become clear that holiday spending is going to be way down in 2022. Meanwhile, there are a couple of long-term trends that won’t be going away any time soon that are squeezing the life out of the industry from both sides. If those long-term trends cannot be reversed, we will soon see a lot more decaying buildings with boarded up windows where thriving retail establishments once existed. The health of the retail industry is critical to the health of the overall U.S. economy, and right now the outlook for the future of the industry is not good.
Earlier today, I came across a brand new survey that discovered that more than a third of all Americans “plan to spend less on holiday shopping in 2022”…
As inflation forces consumers to spend more on gas and groceries, about 1 in 3 Americans (34%) plan to spend less on holiday shopping in 2022 than they did last year, according to a new Clever Real Estate poll of 1,000 Americans.
Retailers have taken notice, hosting holiday sales earlier than normal and ratcheting up discounts to move merchandise. Stores want to draw attention to deals now before Americans decide to cut back further on nonessential spending — especially when 58% of the country already reports feeling worried about finances.
This is yet another sign that we are heading into a very serious economic slowdown, and it is extremely troubling news for our major retailers.
In fact, Target is publicly admitting that it has been forced to “lower its expectations” as we head into the holiday season…
Target’s profit fell by around 50% in its fiscal third quarter as it cleared through unwanted inventory and sales slowed heading into the holidays, prompting the company to lower its expectations for retailers’ most important time of year.
If all the industry was facing was a tough year or two, most retailers could survive that.
Unfortunately, there are a couple of long-term trends that are currently plaguing the industry that aren’t going to go away for the foreseeable future.
First of all, we are witnessing a tsunami of retail theft that just keeps getting worse year after year.
If you can believe it, Target just admitted that theft from their stores will “reduce our gross margin by more than $600 million for the full year”…
The discount retailer told reporters on a call to discuss its third quarter earnings results that inventory shrinkage — or the disappearance of merchandise — has reduced its gross profit margin by $400 million so far in 2022 compared to 2021.
“At Target, year-to-date, incremental shortage has already reduced our gross margin by more than $400 million vs. last year,” Target CFO Michael Fiddelke said on the earnings call, “and we expect it will reduce our gross margin by more than $600 million for the full year.”
We aren’t just talking about somebody stealing a few candy bars.
600 million dollars is an enormous amount of money.
And a spokesperson for Target is attributing the bulk of the losses to “organized retail crime”…
A Target spokesperson told Yahoo Finance via email after the call the shrinkage was mostly specifically attributed to “organized retail crime.”