Americans tightened their belts and their budgets in 2024, a year that also saw bankruptcies for Party City, Red Lobster and the Container Store. Is there a tie between the two?
Yes there is, Lone Star College Economics Professor Hank Lewis says, because those stores don't sell what you might call necessities.
"And because of the steep inflation we've had on food, fuel, housing, and healthcare, a lot of people have been forgoing some of those items or they're finding a better deal online with retailers such as Amazon," or simply finding other restaurants to dine in.
Brick and mortar stores abandoning their four walls for the four-sided screen of online sales has been subject to market analysis for more than 20 years, but Professor Lewis tells Newsradio 740 KTRH that it's still an ongoing phenomenon.
"One of the biggest competitors we're seeing these days for Walgreens and CVS is pharmacy products available on Amazon.
"They've started their own pharmacy and they are buying large amounts of generic prescriptions in bulk and selling them with very thin profit margins, which is making it a lot harder for Walgreens and CVS to compete."
One of the biggest problems with the two competing pharmacy companies is overexpansion. They've been exploring the addition of doctors' offices and some niche merchandise but consumer tastes also change.
And companies like the owner of 7-11 are very familiar with that problem.
"Those companies just overexpanded, they opened up way too many locations. It seems like every block there's a CVS and a Walgreens literally next to each other.
"But I've also seen a whole lot of 7-11s closing in the past year all over Houston."
Will the number of closings and bankruptcies slow down in the new year? Not likely, he says, because there seems to be an economic slowdown on the way. Professor Lewis says he expects it by the end of 2025.
"There was a nice bounce to the stock market on the positive side into cryptocurrency when Trump got elected a couple of months ago, but that may just have been a knee-jerk reaction that was temporary.
"We've been overdue for a recession.
"A contraction? Probably. Recession? Likely. When? Probably by the end of 2025."
Happy new year.
