The past year, 2016, wasn’t kind to oil and gas producers and many sought refuge in bankruptcy. A number of observers are predicting that 2017 will be the year of the retailers for bankruptcy filings.
Some once majestic retail stores like Wet Seal, American Apparel, Aeropostale and Sports Authority have already filed bankruptcy, either Chapter 11 or Chapter 7. Macy’s, Sears and Guess have announced multiple store closings and massive layoffs. Sears is routinely described as “one sick puppy,” “circling the drain” and “ready to crash and burn.”
What’s causing much of this is the rise of Amazon. Online shopping has radically transformed the shopping experience for millions of people. Retailers find themselves whipsawed between changing customer habits, too many retail outlets and unsustainable debt. Making the switch to online from retail is expensive and many retailers don’t have the financial flexibility to make the move. Even the juggernaut Wal-Mart is revamping its operations to embrace online shopping. In recognition of this fact, Warren Buffet’s Berkshire-Hathaway, Inc., disclosed on Tuesday that it dumped over 90% of its holdings in Wal-Mart in the fourth quarter of 2016, from 12.97 million shares to 1.39 million.
If the prognosticators are right, shopping at the mall might one day be as quaint and old fashioned as the Sears and JC Penney mail order catalogs are now.