The value of shopping centers plummeted 30 percent in the last three years, so it is projected that about half of the department stores will close and that another 500,000 jobs in the US retail sector will be cut by 2025, according to two industry reports.
The commercial credit insurer Euler Hermes said the Increase in e-commerce only benefited a small number of companies such as Amazon and damaged profitability in much of the sector.
Euler Hermes, whose report excluded food and drug retailers, found that Online shopping pushed margins across the sector. Price pressure intensified and retailers had to invest in technology and logistics while facing higher delivery costs.
He said profit margins in more than two fifths of publicly traded US retailers have contracted since 2008, while approximately one tenth filed the application for bankruptcy protection.
In a sign of the growing concern in the real estate industry about the consequences, Green Street real estate consultants warned in a separate report that US malls face a “death spiral.”
The value of shopping centers fell around 30 percent since it reached a peak three years ago, which, he said, was a “unprecedented decline in economic expansion“
While e-commerce accounted for about 11 percent of total retail sales, he said, its share of products generally purchased at shopping centers was approximately 25 percent and the consultant predicts that this will rise above a third by 2024.
Department stores in particular have struggled to adapt and still occupy more than 250 million square feet in US malls, Green Street said. Sears and JCPenney, two of the worst performing chains, only account for approximately one tenth.
Craig johnson, founder of the consulting firm Customer Growth Partners, said the sector is adapting and that many of the store closures would have occurred even “if the Internet had never existed“