America Confronts the Retail Apocalypse: A Debate

Shuttered storefronts are common in cities across the U.S. Shopping malls that once thrived at the intersections of busy suburban thoroughfares are empty and abandoned. Meanwhile, online retailing lead by Amazon.com keeps taking a bigger share of the consumption pie. The outlook for traditional retailers seems doubtful at best. Bloomberg Opinion columnists Conor Sen and Noah Smith met recently online to discuss the state of the industry.

Noah Smith: The U.S. is sometimes said to be in a retail apocalypse. The number of stores peaked in 2011, the rate of closings has risen, and the rate of openings has fallen. And this has come during an economic expansion, implying that a downturn would look even grimmer. Though some disagree, the obvious culprit would seem to be the relentless rise of e-commerce, which takes demand away from brick-and-mortar businesses.

In a world of perfectly mobile capital and labor, store closings wouldn’t seem like a big deal — after all, if e-commerce is more productive, then we should switch to that, right? But in reality, store closings can have negative economic effects on the surrounding areas. Fewer local retail jobs can cause towns to shrink, making it hard to support existing infrastructure. Empty stores can become havens for crime, as well as simply being eyesores that make a town a less attractive place to live. Given all these negative local effects, should we be worried?