Big box store closures, their impact on the economy and consumers

Kmart just closed its last full-sized store in the U.S. Many big box retailers are announcing closures, including Walgreens, CVS and 7-11. What does this mean for the economy, consumers, and competition? Professor Michael Wiles from the W.P. Carey School of Business at ASU joins Horizon to discuss the effect on the economy.

“I think its a well reflection of supply and demand,” Wiles said. “There’s some locations and some business concepts that are more successful and are able to maintain their stores and pay their rents. While there’s other business concepts where maybe the time has passed, in this case Kmart, where they’re less popular and less able to meet the demands that property owners or others might charge.”

Retailers like Target and Walmart that emphasize low cost and convenience tend to have a more successful business model, specifically in this economic climate with high inflation. Amazon’s dominance could also be a result of the colsures.

“While there was a growth in online shopping, certainly during the pandemic,” Wiles said. “Over the last six months, it’s actually flattened, and there’s greater growth within brick-and-mortar stores and retail sales than in the online context. I think people just want to get out and enjoy that experience of going to the store and shopping and being able to get exactly what they want. And also not have to deal with a return hassle. So surprisingly, there is greater growth in brick-and-mortar stores and retail sales than online.”