Forbes_USA_June_13_2017

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THE LOOMING RETAIL BAILOUT Think America’s retail industry is hurting now? It’s about to get way, way worse—and these nine charts prove it. BY GEORGE ANDERS While the economy finally seems to have recovered from the Great Recession, complete with discussion of full employment and rising wages, the memo must have missed the retail industry, where top executives of Macy’s, J.C. Penney, Office Depot and the like pepper quarterly analyst briefings with terms like “softening trends,” “disappointing” and “not satisfied.” Since January, at least a dozen shrinking retailers have announced nearly 3,000 store closings. Even well-regarded companies such as Nordstrom see their shares trading at barely half their 2015 highs. Trying to explain their plight, retail executives like to cite hard-to-control factors, such as changing consumer preferences and aggressive moves by the industry’s six-letter word, Amazon. They argue that retrenchment and better luck at merchandising will turn things around quickly. A close look by Forbes, however, reveals that retailing’s troubles run far deeper, largely because of three big, self-inflicted problems. The charts that follow show the painful consequences of retailing’s bare-bones pay habits, a chronic inability to innovate and an ill-timed rush into the high-debt world of private equity ownership. For many, these problems won’t be fixable. In the short term, expect more store closings, half-empty malls, layoffs and liquidations. In a classic Schumpeterian cycle, new and better-run retailers would emerge, benefiting the shopping public and the overall economy. The problems for the brick-and-mortar chains, however, seem so entrenched that the entire retail infrastructure could collapse. And while there’s little support for a retail bailout—especially when Amazon and its ilk make it look so easy—Greg Petro, head of the retail consulting firm First Insight, notes that the closely linked businesses of retail, restaurants and grocery stores employ 28 million people, far more than the U.S. auto industry. Racks of unsold yoga pants won’t seem so frivolous if the con sequences include broken leases, soaring commercial vacancy rates and a real estate sector that falls behind on its debt payments. It’s hard to see how debt forbearance and job guarantees would fix the problems of any industry that refused to innovate or provide its workers with any realistic path to financial success, but that may not stop politicians—who already subsidize retail’s workforce to the tune of many billions of dollars—from promising quick fixes, anyway. CREDIT TK 94 | FORBES JUNE 13, 2017
JUNE 13, 2017 FORBES | 95
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DISCOVER THE #WinstonGarden
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Contents // JUNE 13, 2017 VOLUME 19
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Here’s to breaking more glass cei
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UNICEF does not endorse any brand o
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Suchi Mehta, Sheraton Associate sin
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FACT & COMMENT “With all thy gett
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Slack is where work happens, for mi
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LeaderBoard ABOUT-FACE The rear of
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LeaderBoard ENTERTAINMENT Hello, Do
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LeaderBoard ON THE BLOCK Time Machi
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Learn why enterprises worldwide tru
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REL ABLE You rely on your employees
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O-mobile: Jerry Seinfeld got coffee
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THE ETERNAL MOVEMENT Ulysse Nardin,
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LeaderBoard CONVERSATION THE INTERE
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Where Creativity Connects. Spring i
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STRATEGIES 36 | FORBES MONTH 00, 20
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STRATEGIES most successful technolo
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STRATEGIES Farquhar and Cannon-Broo
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STRATEGIES Mohammed bin Salman, 31
Page 46 and 47: STRATEGIES How the West Was Won Des
Page 48: TECHNOLOGY FAST TECH 25 Big Pharma
Page 51 and 52: CEO, JON ORINGER SHUTTERSTOCK Shutt
Page 54 and 55: 3 0 3 0 U N D E R OFFICE MATES ORGA
Page 56 and 57: ENTREPRENEURS Google Slayer Startin
Page 58 and 59: ENTREPRENEURS HUMAN RESOURCES HOW T
Page 60 and 61: ENTREPRENEURS SMALL GIANTS Lightbul
Page 62: ENTREPRENEURS Vidal later joined Ta
Page 65 and 66: your co-conspirator might give you
Page 68 and 69: INVESTING FUNDS Build the Wall! Por
Page 70 and 71: Passion fuels potential. Inspiratio
Page 72 and 73: America’s Richest Self-Made Women
Page 76 and 77: Sponsored Inspiring Greatness: ADVA
Page 98 and 99: FORBES RETAIL BAILOUT CHEAP LABOR H
Page 100 and 101: FORBES RETAIL BAILOUT 10 5 0% % 10
Page 102 and 103: THE BIG CHEESE FROM PIZZA HUT AND D
Page 104 and 105: THE CHEESE KING An avalanche of che
Page 106 and 107: THE CHEESE KING Just as his timing
Page 108 and 109: FORBES LIFE The Second Time Around
Page 110 and 111: THOUGHTS ON Pioneers “I don’t r
Page 112 and 113: LET’S LACE UP OUR SHOES. LET’S
Page 114 and 115: HOW ONE WOMAN LAUNCHED A PUBLIC HEA
Page 116: THE ZIP SHOULDER TOTE DETROIT • W
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Forbes_USA_June_13_2017

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