While much of the world is experiencing declining growth, the U.S. economy, despite its Purchasing Managers index (PMI) hitting a ten year low in August, the low unemployment rate has helped boost retail sales… but not enough to stop the overall retail worries.
Retail bankruptcies rose sharply, with more expected in the second half of the year, and store closures are skyrocketing.
According to the professional services firm BDO USA LLP, brick-and-mortar stores will continue to close at a higher rate as retailers grapple with excessive debt, over expansion, private equity-ownership pressures and changing consumer behavior.
Adding to soft retail number expectations, the 2018 holiday season suffered its worst sales performance since 2009.
A report issued by Coresight Research predicts more than 12,000 stores will close, compared with one-half that number in 2018.
Beyond retail, growth in the lodging sector is also slowing.
For almost a decade, the hotel business was on a roll. No more. Hotel owners in large cities say they are getting squeezed by weaker demand, higher labor costs, and too many new hotels going up which are putting pressure on the rates they can charge.
According to one president of a hotel chain, “The floodgates have opened in terms of supply.”
New York City looks particularly vulnerable. Over the past decade the City saw a dramatic rise in the number of new hotel rooms being built, yet now there’s a drop in overall capacity.
TRENDPOST: Among the first sectors to be hit by the Greatest Depression will be hospitality, real estate, auto and retail.
Businesses and individuals whose livelihood and future are tied to those sectors should begin planning now for the future. Despite the dramatic coming contraction, there will be new OnTrendprenuer® opportunities to build brands stronger and/or seek new directions to create products and services that will thrive in the coming socioeconomic and geopolitical environment.