Leading stock investor and owner of the Berkshire Hathaway company, Warren Buffet, is sounding the alarm on the death of retail as we know it. Buffett states that retail is changing forever. In 10 years, the industry will hardly even be recognizable.
Buffett states that the biggest change will be that the average department store will migrate to doing most of its business online rather than in a physical brick-and-mortar store as we are used to seeing it. This exact phenomenon has already brought down several retail giants including Toys ‘R Us and The BonTon Stores as well as Claire’s and
Remington Outdoor. More casualties in the retail world are sure to follow as business giants migrate online and allow people to order items without ever leaving their couch or their living room.
Buffett states he would never get into the retail industry as it’s too tough of a market in this day and age, especially with Amazon.com taking over so many sales in so many categories of retail. This year, about 8,600 retail stores are subject to close versus less than 6,200 during 2008 when the stock market, housing market, and economy as a whole collapsed.
These changes in lifestyle have a lot to do with how people are spending their money as well. Many people are spending less on food and clothes and more on entertainment, restaurants, and technology purchases than they were before. Other stores have been hit hard by these trends, too, even if they are not yet filing for bankruptcy. Chains like Macy’s, JCPenney, and Sears have seen sales plummet in recent years and that trend will likely continue in the coming years.
Sadly, Buffett believes these trends are indeed permanent. More and more shopping will be done right on someone’s TV, computer, or smartphone rather than in a brick-and-mortar store. This new trend of the ultimate modern convenience will likely not change soon, and sadly, many retailers will suffer for it.