America’s ‘nondescript middle class’ of retail collapses, leading to store closures and bankruptcies in 2023, experts say

• As “pandemic spending” declines, some retailers will likely be sidelined, said consultant Steve Dennis.
• Stores like Bed Bath & Beyond are a “nondescript middle class,” Dennis said on the Remarkable Retail podcast.
• Price-conscious chains such as Dollar General and TJ Maxx will join the mall.

Like Bed, Bath & Beyond, 2023 will see a series of store closures and bankruptcies.

That’s according to retail consultant Steve Dennis. Dennis is a former Sears executive who co-hosts the podcast Remarkable Retail with Michael LeBlanc.

Over the past decade, retailers like Sears, JCPenney and RadioShack have closed or gone bankrupt as they battled online competitors like Amazon and a shrinking middle class. Industry experts and journalists have dubbed the phenomenon the “Retail Apocalypse,” and have reported on the emptiness of stores, especially malls.

The decline in middle market retailers reflects the widening gap between rich and poor in America. The gap between rich and poor in America more than doubled between 1989 and 2016, according to the Pew Research Center. A decline in middle-income consumers means a shrinking customer base for retailers that have traditionally targeted the middle class.Retail Dive reports in 2019 .

“The uncharacteristic collapse of the middle class is where it gets crazy,” Dennis said on the podcast. “This includes the real estate and retail industries, which have a volatile future,” he said. Dennis said consumers have many options when it comes to deciding where to shop, from dollar stores to D2C brands. That’s why department stores and other retailers that once served a broader middle class are in trouble.

Some of these retailers were temporarily rescued by the pandemic, Dennis said. Bed, Bath & Beyond, for example, benefited as consumers spent more time at home, buying kitchenware, furniture, and more.

Over the months, however, consumers shifted from discretionary spending like clothing to groceries and consumables. “There’s new pressure on the unremarkable middle class,” Dennis said.

“If you work for one of the middle-tier-stuck retailers like Bed, Bath & Beyond or Kohl’s, your life is unlikely to get any easier,” he said. said.

“Economic pressures will expose vulnerabilities for many retailers,” he added.

Many of the retailers likely to replace these companies are focused on offering consumers good value for money, he said.NPR’s Marketplacereported in April. Over the past few years, stores like David’s Bridal and Bed, Bath & Beyond, which Marketplace has dubbed “the fading middle class of retail,” have been replaced by Dollar General, Dollar Tree and TJ Maxx. , has been superseded by Marshalls.

As Insider previously reported, Amazon, Target and Walmart are all seeing the decline of middle-class retailers, especially stores like Bed, Bath & Beyond, as consumers look for “good deals.” There is a possibility that it will work positively for brands such as.

“U.S. consumers have limited dollars to spend, and they want to get the most out of their spending,” Naveen Jaggi, president of Americas at real estate services firm JLL, told Marketplace. .

Meanwhile, luxury retailers like Gucci and Hermès continue to attract wealthy customers. The wealthy continue to make big purchases even as inflation remains high.