While many have been quick to cast Amazon in the role of Retail Boogeyman in recent years, a new piece from Retail Dive argues that an ever-expanding wealth gap — and an ever-diminishing middle class — is what’s really going bump in the proverbial night.
“It’s convenient to blame Amazon for retailers’ struggles,” the story said, “but the real culprits may be the rising costs and stagnant income dragging down the middle class.”
Between 2007 to 2017 “income growth for those with mean annual household earnings of more than $100,000 rose a staggering 1,305% more than those with less than $50,000.” And while income for those earning under six figures has stagnated, non-discretionary expenses (like healthcare and student debt) have skyrocketed, leaving many with “precious little income left to spend on discretionary retail.”
And that’s where the symptom and the problem converge. As one expert noted, ”lots of employment for the middle class has traditionally come from retailing, especially small- and medium-sized stores,” but with “fewer and fewer Americans able to grow — or even maintain — wealth, more and more are turning to lower cost retail providers.”
And that spending shift has created “something of a vicious cycle” in which “all the ‘mom and pop’ retailers are vaporizing before our eyes,” which means less middle class jobs, which means less income to spend at mom and pops, which means less mom and pop shops, ad infinitum.
“Store closings are the canary in the coal mine,” another expert said. “They are tell-tales of fundamental economic shifts in the country… All of the travails are rooted in this bifurcation of consumer earnings, aka the demise of the middle class.”
You can read more about it at Retail Dive.