The Great Recession earned that moniker because of the breadth and depth of the economic downturn, but even “great” recessions aren’t universal in terms of causes and effects.
Those that touched it off and were most directly hit are easy to identify — housing, housing finance, banking and sectors that fed directly into them, such as building-products manufacturing.
But there also were sectors that seemed untouched by the recession — aerospace, agriculture and high tech among them. All three play significant roles in Washington’s economy, which is why in this state the recession was not as “great” as it could have been.
Then there’s a third piece of the economic picture, consisting of those sectors that were in trouble before the Great Recession hit and are still in trouble long after other sectors have clawed their way back to something resembling recovery.
Those are the sectors that, because of technology, outside competition, changing consumer behavior or all of the above, were going through massive restructuring and downsizing well before the housing sector began behaving badly, in an effort to find new business models that work.
For this column we’re going to focus on a sector whose participants are still trying to figure out what future they have: retail.
The continued troubles and upheaval in retail were underlined and emphasized with reports in the past week that Sports Authority is closing all of its stores, including several in Washington.
That a chain in the sporting and outdoor equipment retailing sector is closing can’t be considered a shock. Take a look at the ad inserts in the print edition of today’s newspaper. You won’t lack for places at which to spend your recreational dollar. Try compiling an off-the-top-of-the-head list of retailers of outdoor and sporting gear; between Big 5, Dick’s, Cabela’s, Bass Pro Shops, REI, Play It Again Sports, not to mention the chain and independent stores that focus on one specific segment such as cycling or skiing, or all the general-merchandise outlets such as Fred Meyer, and it’s quickly evident how crowded the space is.
It’s not that the total pie is contracting. The National Sporting Goods Association says consumer retail dollar sales of sporting goods equipment, athletic footwear and athletic apparel increased 4 percent in 2015. Not robust but — given the size of the base to which that growth rate is applied — that’s not bad.
Still, even a growing pie can only be sliced so many ways before someone goes hungry. In this case, that someone was Sports Authority.
It’s not the first instance of consolidation and downsizing in this sector. Gart Sports was a sizable player in sporting-goods retailing until a merger in 2003 with, you guessed it, Sports Authority.
It won’t be the last. Reuters recently reported that Bass Pro Shops is considering a takeover bid of fellow outdoor-gear megastore Cabela’s.
The convenient scapegoats for what’s happening in retailing are the recession and Amazon. Online is a factor, at least for bricks-and-mortar stores; the trade group says that online sites have overtaken discount stores as the third-largest channel for equipment sales (full-line sporting goods stores and specialty sport shops were first and second). The recession didn’t help anyone in retailing, as consumers lost jobs and income and even those still employed closed their wallets.
Here’s a third cause — the U.S. was decidedly overbuilt in retailing space even when people were spending money and when they were doing so in physical stores. Throw in the recession and online, and it’s little wonder that while the residential, warehouse and office segments of construction are growing, no one’s in a hurry to add more retail space.
Sporting-goods retailing is not alone in its predicament. Consumer-electronics retailing went through a massive shakeout years ago. Macy, JCPenney and Sears are trying to figure out if people still want department stores. In apparel retailing (which carries the added risk of fickle swings of taste in fashion), Aeropostale is in bankruptcy court, having lost money for 13 straight quarters, and plans to close stores.
Others are trying to get ahead of the consolidation wave. That was the intent of Staples and Office Depot in proposing a combination, although regulators and the courts didn’t buy the argument that Amazon is of sufficient size in that market to ensure competition. Walgreens wants to buy Rite Aid. The Albertsons-Safeway deal, driven by similar ideas of consolidation, had as an unintended consequence the Haggen debacle.
Economists claim to know the beginning and ending date of the Great Recession. That’s impossible to do with retail, because what retail is going through is far more consequential than even a term like “great recession” can cover. And whatever the starting date of the Great Restructuring, it’s not close to being over.
Bill Virgin is editor and publisher of Washington Manufacturing Alert and Pacific Northwest Rail News. He can be reached at email@example.com.