The traditional American place the shop, the local mall, is quickly becoming a thing of the past. Online shopping, and discount giants such as Walmart, have made enormous progress in taking business from traditional brick-and-mortar retail outlets. This Christmas season is witnessing countless more retail chains filing for bankruptcy.
The conventional wisdom from industry insiders is to blame Internet sales and discount outlets; however, there may be a more serious problem than most realize. The US economy is in a giant inflation bubble that has affected every aspect of our lives: from shopping patterns, to the way we pay for medicine and higher education. Middle class wages have not kept pace with the rate of increase in the cost of living over the past 30 years. There is ample evidence that good paying jobs are difficult to find for most Americans. This is one major part of the reason people are beginning to shy away from expensive mall retailers in favor of discounters, the prices are simply too high for most consumers.
If we look at average rental costs in a mid-sized town such as Fredericksburg, Virginia, we can see how even successful mom and pop businesses are closing due to exorbitant rents. The owner of the former Blackstone Coffee shop in Eagle's Village confided to friends that the rent on his small location had risen to over $10,000 a month, at which point he closed that location. The business had been successful, it was very popular with consumers, and was always busy. However, we must consider how much the business would have to charge per cup of coffee just to keep up with the rising costs associated with running the business.
If one little coffee shop was facing rent of over $10,000 per month, it is difficult to imagine how much a giant sized mall anchor store such as Macy's is paying per month. Add in other rising prices, such as: insurance, utilities, labor costs, etc. and it becomes impossible for mall retailers to lower their prices in order to remain competitive with online retailers that are not burdened by the same costs.