You could think of modern retailing as a lifeboat that is taking on water. Every now and then, one passenger jumps (or is pushed) overboard and the boat rides a little higher in the water. For a little while.
hhgregg is the latest to take the plunge, joining Radio Shack and countless others in the murky depths. Best Buy, J.C. Penney, and others may be feeling a little more buoyant today, but it's not likely to be very long before that terrible sinking feeling returns.
J.C. Penney recently started selling appliances, so it may see some benefit from hhgregg's demise. And with hhgregg overboard, Best Buy solidifies its position as the last-standing big electronics retailer, at least for now.
hhgregg filed for bankruptcy last month while it tried to find a buyer, but after meeting with more than 50 private equity firms and other potential saviors, it was obvious that there would be no lifeline, so the electronics and appliance retailer began jettisoning its inventory over the weekend.
It expects to close all 220 stores by the end of May, displacing about 5,000 employees.
The bubble burst
You can blame all of this on Amazon and other online retailers, but analysts say there's another factor at play as well -- a retail bubble. America is simply "over-stored," as one observer put it recently.
Urban Outfitters CEO Richard Hayne said much the same in a recent Indianapolis Business Journal report, saying big malls added way too many stores in recent years -- many of them selling the same things.
“This created a bubble, and like housing, that bubble has now burst,” he said. “We are seeing the results: Doors shuttering and rents retreating. This trend will continue for the foreseeable future and may even accelerate."
Shopping malls already have hundreds of slots to fill, and the situation is likely to get worse, especially as "anchor" retailers like Sears and Macy's continue to close stores, or even sink from sight.
It's not doing much for job growth either. The Labor Depmartment reported Friday that retailers cut around 30,000 positions in March, the worst two-month showing since 2009.