Traditional retailers continue to feel the pinch. But Amazon and ecommerce aren't the only causes of their problems—socioeconomic factors are also coming into play.
Sears was the latest bastion of retail to release disappointing sales figures. The company reported revenues for fiscal 2017 totaled $4.38 billion, down 27.7% year over year. The retailer now operates 1,002 stores, down from 1,430 a year ago, and plans to close an additional 100 by April.
This is just one more example of the so-called retail apocalypse. But these downturns aren't happening to retailers across the board. Shrinking revenues and footprints are the result of economic forces that have been long in the making.
Between 2007 and 2016, high-income consumers (the 20% earning more than $100,000) experienced 4% growth of their disposable income, to 63% of total income. The disposable income of middle-income consumers (the 40% earning $50,000 to $100,000) remained flat, at 39%. Meanwhile, low-income consumers (the 40% earning less than $50,000) saw their disposable income dip 16% during that timeframe, putting their discretionary share of wallet at -23%.
This widening disparity in US incomes is having an effect on retail. Deloitte looked at revenue growth among different types of retailers over the past five years: "price-based" retailers, those that compete solely on price like discount and dollar stores; "premier" retailers, which offer exclusive products and experiences; and "balanced "retailers, those that focus on price and promotions and sell widely available merchandise. It found the higher-end stores experienced revenue growth of 81%, while revenues for discount stores grew 37%. By comparison, revenues at midrange stores grew only 2%.