It's Not Just Retail That's Changing - It's Us

Despite record highs in the markets, bad news about consumers has been relentless. Malls are closing; consumers have accumulated too much debt; incomes are stagnant. None of this bodes well for future consumer spending and economic growth.

What if many factors are creating an enormous economic shift that we cannot see because we are right in the middle of it? Retailers have been having difficulty understanding these changes, much less responding to them. Consider the following five elements as prime drivers of the new "retail misery index":

Income: Incomes have been flat for the past few decades. The top 10% has seen gains, as have the 1% - but the biggest gains have come in the top 0.1%. This is reflected in markets like art, mansions and estates, and collectible automobiles. The top 0.1% are not big on malls. Flat incomes have made the average shopper a much savvier consumer.

Inflation, deflation, new categories: On the one hand, we have seen relentless inflation in housing, education and medical costs - each driven by different factors. The flip side is the ongoing price decreases in so many consumer products, from clothes to electronics, and most especially technology.

However, new product and service categories simply were not in a family's household budget 10 or 20 years ago. Even commercial email service is barely 20 years old. Time: It is easy to underestimate the amount of time pressure people face today. It comes from email, instant messages, Slack, etc - all of which follow us everywhere via our mobile phones. We are never unplugged from work. Any sort of time-saving service has a potentially enormous impact.

Psychology: While the financial crisis left consumers with post-traumatic spending disorder, let's focus on one other thing: stuff. Americans used to love stuff of all sorts, but today, we seem to have moved past it. Perhaps it's part of the shift to digital. Technology: It's too easy to blame Amazon for all of retail's problems. But there can be no doubt that technology has made the retailers' job much harder. Consumers today are better informed about prices via price comparison engines than ever before. Showrooming is rampant - in which shoppers visit a physical store to browse, but then buy online.

We are undergoing a fundamental change in how society consumes products. It is happening both too slowly, and yet too fast to adapt.