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Nearly a hundred billion dollars a year! "Zero dollar purchases" hit U.S. retailers hard! "Closed shop tide", "bankruptcy tide" is coming?
Sep 07,2023
With the "zero dollar purchase" becoming a social problem in the United States, these organized robberies are causing damage to business operations.
Recently, many U.S. retailers have attributed the company's poor performance to this, and many retailers have warned that over time, this may lead to store closures and layoffs.
In addition, in a high interest rate environment, operating profits in the U.S. real economy are being squeezed and operating pressures are gradually increasing. As American consumers shift from goods to services, traditional retailers are facing a severe test.
Nearly a hundred billion dollars a year
Since 2021, the "zero-dollar purchase" behavior in the United States has intensified and gradually become organized, which has severely impacted the U.S. retail industry and caused a national industry crisis.
According to various reports from the American Federation of Retailers, the value of goods in the United States will be lost by about $94.5 billion in 2021, accounting for about 1.4 percent of the total retail sales for the year, of which 37 percent will come from external theft.
In the recent financial report, almost all merchants cited retail theft as the reason for the decline in gross profit margin. Over the past few weeks, Wal-Mart, Macy's Target, Lowe's and Foot Locker have all cited the impact of this crime on their businesses and employees, with losses that can run into the billions of dollars.
US retail giant Macy's recently reported second-quarter results, showing that the company's net sales were $5.13 billion, down 8.4 per cent from a year earlier, with a net loss of $22 million billion.
Affected by the poor performance of the financial report, Macy's stock price fell 14% last Tuesday, the biggest one-day drop in more than a year. Its stock price has fallen by more than 30% this year.
Target, the second largest retailer in the United States, claims that its theft cases increased by 120 percent in the first five months of 2023. If this situation continues, the company may lose $0.5 billion in profits for the whole year.
Dick Sports, the largest U.S. sporting goods retailer, said that the company's second-quarter profit fell short of market expectations due to rising thefts, which directly caused the company's stock price to plummet 24% and even brought down the entire sporting goods sector.
"Zero yuan purchase" rampant reasons
The continuous downturn of social economy and the high cost of living are the direct causes of "zero yuan purchase. Bank data show that in the second quarter of this year, the scale of US credit card debt reached 1.03 trillion billion US dollars, and the credit card default rate also hit an 11-year high.
High levels of inflation have left some Americans unable to afford their day-to-day expenses. Superimposed by the proliferation of guns, the deterioration of social security has exacerbated the frequency and violence of "zero purchase.
The connivance of the judicial system is the deep reason for the frequent occurrence of "zero yuan purchase. Behind the seemingly fair and developed judicial system in the United States, there is also an equally developed misdemeanor economic industry chain. And the U.S. police force is limited, and the priority is to ensure the security of high value-added enterprises and elite communities.
In the face of government chaos and police inaction, the U.S. retail industry can only rely on itself to fight against "zero-dollar purchases. The already meager profits will not only be squeezed by newly purchased monitoring equipment and security technology, but also eroded by high interest rates. It can be predicted that American retailers will face severe tests under the storm of "zero dollar purchase.
Closure tide, bankruptcy tide
Macy's weak sales performance reflects the difficulties facing the US retail industry. Due to inflationary pressures and recession concerns, consumer spending has slowed, business operating costs have increased, and industries such as clothing, sporting goods, and cosmetics have improved at a slower pace than expected. The U.S. retail industry has even set off a "closed-store wave" and "bankruptcy wave".
Many analysts have pointed out that the Fed's aggressive interest rate hikes in the past year or so are one of the important factors that have contributed to the deterioration of corporate financial conditions and bankruptcy. Although the U.S. stock index has been rising all the way this year, the real economy has actually hidden a crisis.
It is not just retail companies. In the high interest rate environment, the operating profits of the real economy in the United States are being squeezed, and the operating pressure is gradually increasing. Data show that in the first seven months of this year, the United States received a total of 402 bankruptcy applications from medium and large enterprises, more than the whole of last year.
At present, how to "survive the Jedi" has become an urgent problem to be solved in the US retail industry. Macy's CEO Jeff Gennett said that we are seeing uncertainty in the macroeconomic environment and are using powerful data science tools to optimize inventory composition while reacting to changes in consumer preferences to meet demand.
In addition to efforts to "clear inventory", Macy's is also looking for other ways to restart growth and reshape its image, such as opening smaller stores in large shopping malls.
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