Think of retail as a highly leveraged bank/hedge fund with a 30 times leverage ratio.
Most retailers have less than a 5% margin. Sales have to decline about 10-15% and the whole thing collapses.
Think of Walmart for e.g. Imagine, the shoe rack disappearing (Zappos, ShoeDazzle etc…), then DVDs (Netflix…), then clothes & so on…
All it needs is small changes at the edges & that leads to a product death spiral.
The broader impact is even more fascinating:
- What happens to malls that rely on retailers as anchor tenants?
- What happens to the suburban lifestyle?