Death of Sears traced to your tight budget

Wednesday, November 21, 2018
 | 
Chris Woodward (OneNewsNow.com)

Sears ad and buildingMillions of Americans are witnessing the disappearance of Sears stores, and an analyst says the demise of Sears is a story about the middle class.

"To begin with, we can see that the middle class is disappearing just by our shopping habits," says Jameson Taylor of the Mississippi Center for Public Policy (MCPP). "Consumer spending accounts for a significant portion of the U.S. economy, and we can see that spending in how people shop."

Increasingly, he says, there is a divide between low-income shoppers who might drop by a dollar store and high-income shoppers who can easily drop several dollars at a high-end retail store. 

Taylor

"This has been happening since the 1970s, but in particular in recent years we're seeing the top five percent of earners in the United States accounting for almost 40 percent of consumer spending," he says. "These people are not shopping at Sears."

The former king of catalog sales, which became the king of retail stores for 60 years, filed for Chapter 11 bankruptcy protection in October. 

Taylor believes the same could be said for J.C. Penney, which he says is on the "brink" of following the demise of Sears because of middle class spending.

"The middle class is being squeezed out by high health care costs, in particular high health care costs, also due to rising educational costs," Taylor advises. "But we're going to see this with retailers like J.C. Penney that have traditionally focused on the middle class --- they're getting squeezed out by dollar stores and Walmart on one end and by more high-profile destinations on the other end."

Meanwhile, Taylor says tax breaks from states and cities offered to large brick and mortar retailers as well as Amazon are squeezing out small businesses.

"That makes it really hard," he says, "to start and sustain a small business these days."


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