A lot has changed since COVID-19. Things like… where we work. COVID made remote work very attractive. Around half of all workers were working from home in 2020. Since then it dropped to just 25%…. which is still pretty high compared to historical levels. The real estate market is in a state of limbo. Property owners… mostly banks… are waiting to see if corporate America will force workers to return to the office. If they don’t, there is considerable fear that corporations will not renew their leases and cause a real estate crash. Masks and social distancing are no longer required, but they’ve left their mark. Most Americans seem to have lost their best “small talk”. If you were slightly socially awkward before COVID, you’re practically a recluse now.

After two years of alternatively being told that the Pandemic would kill you or it was a hoax, entry-level workers got tired of being “front-line” workers. Add to that changing demographics, and hiring entry-level workers became… difficult. Or at least hiring cheap entry-level workers became difficult. An early solution was to add automated check-out kiosks. The “discount stores”… CVS, Duane Reade, Rite-Aid, Walgreens, etc. … were especially aggressive in installing automation due to their low-profit and low staffing level business model.

After a little adjustment to our expectations, this became our new normal. And, when the lines get long, a robot checkout may be a decent alternative compared to barely motivated cashiers. But discount stores cut more than cashiers. In California, where entry-level workers are especially hard to hire, some discount stores had barely one or two workers, running back and forth between operating the check-out and restocking the shelves.

Without even basic staffing and security, shoplifting rose and was soon out of control. But what does a discount store do to stop theft? They choose the cheapest option. The most often stolen products were locked away in plastic or wire cages. If you need a “caged” product, you must press a button and wait (hope?) for someone to arrive who can unlock your product. IF you need more than one caged product, this “convenience” store becomes a lot less convenient!

Next Door is a popular place for neighbors to talk about events in their area. Like many similar sites, NextDoor largely devolved into complaints about your neighborhood. The two most frequent complaints? The rise in shoplifting, AND the hatred of product caging! I decided to survey Next Door about the problem, “What do you do when you want a caged product, and no one comes when you press the button?”

The overwhelming answer? “I go home and shop on Amazon.” Well now! It looks like some problems provide their own solutions. CVS has already announced the closure of 10% of its stores. Rite Aid, primarily based in New York City, plans to close 25% of its locations. Some of these closures are driven by shoplifting, but changing shopping habits are also to blame. Local discount stores face declining revenues and rising costs, while Amazon’s sales in 2021-2023 increased by over $100 billion. Consumer spending hasn’t truly declined, it’s just migrated to more convenient platforms.

Another theme in the die-off of discount stores. The lack of knowledgeable staff. If you want some guidance about the best shampoo for your hair type, or which razor causes the least nicks, the store’s staff has little knowledge of the products they sell. If you watch other shoppers, you see that they all look up product reviews on their phones. Amazon is opening up the gap between in-person and online shopping by introducing Rufus, their new AI shopping assistant. If I want help to find a product with specific features, Rufus is pretty good at selecting products and explaining why it’s the right product. Discount stores? Not so much.

The future of discount stores is looking pretty uncertain as they grapple with the challenges of rising shoplifting, changing consumer behaviors, and increased competition from online retail giants. While the corner discount store may not vanish entirely, it will need to makes some changes and adapt to new needs if they want to remain relevant. Can discount stores reinvent themselves? I don’t know. What do you think? Anyway, that’s my Niccolls worth for today!