Big companies make news while smaller companies bear plenty of the brunt of the effects of what that news is about And so when CNBC’s Krystina Gustafson headlines any real estate story with the word ‘tsunami,’ it’s a good idea to pay attention.
The subject of her late-January article was the prediction by many real estate analysts that the current spat of major retailer store closing announcements is the tip of the iceberg for what lies ahead in retailing.
The next era in retail—one that will be characterized by far fewer shops and smaller stores-is being projected based on the announced plans by many leading companies.
Sears said that it will shutter its flagship store in downtown Chicago in April, the latest of about 300 store closures in the U.S. that Sears has made since 2010.
That news follows January announcements of multiple store closings from major department stores J.C. Penney and Macy’s. Further signs of industry cuts came with Target said that it will eliminate 475 jobs worldwide, including some at its Minnesota headquarters, and not fill 700 empty positions.
What does this mean for Main Street and the lenders that serve businesses there?
These stores are making long-term bets on technology based on definitive reductions in foot traffic and clear gains through online sales. While these trends don’t affect many sectors like hospitality, automotive and housing, they directly impact ancillary businesses that thrive around malls and shopping districts: independent retailers, restaurants and some convenience.
Business lenders should examine business acquisition loan requests and other transactions that may be caught in this crossfire.
And as advocated in this column before, it’s not to early to explore strategies to benefit from the technological shift our economy is experiencing.
Read more at CNBC.