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AMERICAN consumers are “running out of money” as inflation continues to bite, an ex-Target executive has warned, ahead of a slower-than-normal expected holiday season.
Gerald Storch, the former Vice Chairman at the retail giant, said stores are bracing for a subdued holiday shopping season in the midst of political and economic chaos.
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“It’s very clear that consumers are running out of money,” he told Fox Business’s Maria Bartiromo.
“They’re increasingly stressed by inflation and the exhaustion of their pandemic-era savings.
“When you take a look over the last several years, what you see month after month, everyone talks about, the consumer’s still spending.
“They might be, but they’re spending less than the growth of inflation.”
READ MORE ON STORE CLOSURES
He added that he didn’t expect “too much” for the Christmas season, but 2.5% growth would represent a win.
Storch, who was formerly the Toys “R” Us CEO, also warned that it would be a “weak Christmas” for retailers, with both the presidential election and global uncertainty, weighing down on shoppers.
It comes as experts have made gloomy expectations for the US economy, with tens of thousands of retailers potentially closing in the next few years.
According to an earlier report from UBS analysts, up to 45,000 retailers could shut for good by 2030.
Among the retailers predicted to be affected by the closures are stores used day-to-day by millions of Americans including Big Lots, Family Dollar, and Walgreens.
Storch went on to blame the closures on stores making a “big bet” on physical locations, while online shopping has taken off.
“A lot of these retailers expanded very rapidly,” he said.
“Walgreens has like 4,000 stores – it’s incredible. Same thing for Family Dollar.”
And while retail sales have grown in the 12 months to September by 1.7%, inflation grew by 2.4% in that time.
With prices rising more than sales, many consumers feel they are getting less value for money.
US braces for ‘45,000 store closures’
Some 45,000 brick-and-mortar stores could close in the next five years, experts have warned.
Several major retailers have announced store closures or gone out of business altogether in recent years.
Chains such as Foot Locker, Sally Beauty, Tuesday Morning, Shore City, Z Gallerie, and Mitchell Gold + Bob Williams have all gone out of business.
Bed Bath & Beyond has closed all of its brick-and-mortar stores and is now an online-only retailer.
The most affected retailers have been clothing, consumer electronics, sporting goods, hobby, book, music, and home furnishing stores since the start of 2019.
UBS has predicted the total number of retail stores will drop by 45k from 958k to 913k.
Despite that, the report says that certain stores should thrive while others decline.
It said retailers such as Walmart, Costco, Home Depot, and Target, could be among the winners.
It comes after billionaire Mark Cuban warned The U.S. Sun there is no “quick fix” for America’s retail apocalypse.
Explaining the “big problem” faced by stores, the Shark Tank judge said that communities across the US will “die” if brick-and-mortar stores continue to shut at such alarming numbers.
However, others have claimed that the retail apocalypse may not be such a straightforward picture.
Shopping center vacancy is at the lowest level it has been in two decades, according to a report from real estate firm Cushman & Wakefield.
But despite that, some stores have been devastated by closures.
Discount chain Dollar Tree has closed more than 600 locations this year, the majority coming from its Family Dollar subsidiary.
