Declining Industries Destined to Fail
A buzzword tossed around frequently by tech companies is “disruption.” The idea: A small startup company can create a new good or service that significantly changes the way consumers, industries, and businesses operate.
Disruption is nothing new in the U.S. economy. Go all the way back to the Industrial Revolution in the 19th century, and you’ll find a considerable example of new tech that decimated entire industries and gave birth to new ones.
The only constant in the U.S. and global economy is change – and, well, things are changing at a rapid pace in the 21st century. Tech such as computing, the internet, and Information Technology are changing the U.S. economy swiftly, leading to the destruction of several economic sectors and jobs.
In the past, new tech killed industries and jobs and then absorbed workers into different professions. But some economic experts fear the current technological revolution will cause massive job losses, and not as many gains this time around.
Either way, several U.S. industries are currently in peril. Sectors like print media, bookstores, and big box retail have been bleeding jobs and revenue since 2008. The COVID-19 pandemic has, in some cases, only accelerated the downward trend of these industries.
Empire Resume will examine four U.S. industries rapidly declining and destined to fail, including what’s led to their free-fall and what industries could possibly replace them.
1. Movie Theaters
Many industries have taken enormous hits because of COVID-19 lockdowns and social distancing. But it turns out Movie Theaters have been hit the hardest. Revenue for the Movie Theater industry is expected to decline by a mind-boggling 66% in 2020, according to figures from The Hollywood Reporter. Movie Theater chains and businesses have been hammered by the pandemic.
Before coronavirus, Movie Theaters experienced relative growth because of big blockbuster films. But popular streaming services like Netflix and Hulu pose an enormous threat to the industry. Stephen McBride, the editor of RiskHedge Report, recently wrote in Forbes the pandemic could spell the beginning of the end for the Movie Theater industry.
Americans went to theaters in 2019 less than any time since the 1920s, according to data from Box Office Mojo. For years, Hollywood film studios gave theaters exclusive 90-day rights for new movies, meaning the movies couldn’t be released in any other format until after shown in theaters first.
With theaters shut down due to the pandemic, filmmakers have been releasing movies online. McBride reports that some film studios, like Universal, will no longer give Movie Theaters exclusive 90-day rights even after the pandemic is over.
Still, theaters may not be destined to fail. For example, big tech companies like Amazon or Netflix could buy out theaters, much like how Amazon bought Whole Foods. Nevertheless, Movie Theaters are in big trouble.
2. Newspaper Publishers
Much like Movie Theaters, print newspapers may soon be a thing of the past. The news industry has been declining for the past 30 years, leaving many people wondering what the media’s future will look like.
Print newspaper subscriptions dropped consistently between 2000 and 2016, and many small, local newspapers across the country are closing. An obvious rebuttal is, “What about online and digital subscriptions?” Some large, national newspapers are doing very well online, but smaller ones aren’t.
For example, The New York Times added about 587,000 digital subscribers in the first quarter of 2020, according to the Financial Times. That’s more than the combined total of all the 100 newspapers owned by Gannett, America’s largest print newspaper publisher.
The internet ushered in the new era of online news, and people have predicted print newspapers’ demise for a while now. The Pew Research Center reported in 2018 that, for the first time, more Americans get their news from social media than from a print newspaper.
Print newspapers may die, but experts predict media companies will adapt to the digital era, as some have already done. But people in the media business are asking, though, what will it look like?
3. Taxi Industry
When talking about disruptive tech, one prominent example is ridesharing companies like Uber and Lyft. Within about a decade, ridesharing has pushed the traditional Taxi Industry to the brink of extinction.
Taxi cabs are almost synonymous with New York City, which provides a good microcosm for how quickly Uber and Lyft have risen to prominence. The number of daily Uber trips in the city rose from about 50,000 to almost 500,000 between 2015 and 2018, according to data from the New York City Taxi & Limousine Commission. During that same period, the number of taxi trips declined from 400,000 to 300,000.
Uber and Lyft are the two big names, but they’re part of the bigger Ridesharing Industry. The industry didn’t even exist until about a decade ago, and now it’s worth about $61.3 billion, according to Business Traveler. Experts predict the industry will grow to about $218 billion by 2025.
The traditional Taxi Industry hasn’t been able to compete and will likely become a thing of the past. Ridesharing is a prime example of disruptive tech that has perhaps unintentionally killed an entire industry.
4. Department Stores
Remember the days of going to the local mall and shopping at big department stores like J.C. Penney, Foot Locker, and Bed Bath & Beyond? Well, many of these large, national chains may not survive the coronavirus pandemic.
Since 2018, approximately 22% of all U.S. department stores have closed, according to statistics from Forbes. Online retailers were already disrupting department stores, and the pandemic has only accelerated the trend. Retail Dive reports that 27 U.S. department stores have filed for bankruptcy in 2020 so far, including J. Crew, J.C. Penney, Century 21, and GNC.
Observers call this trend the “Retail Apocalypse,” which started around the time of the financial crisis of 2007. One huge cause of the decline of retail and department stores is Amazon and e-commerce. In 2016, U.S. retail sales grew by a meager 1.4% while e-commerce sales increased by 10.1%, according to PricewaterhouseCoopers.
Some brick-and-mortar department stores and retail chains will likely survive, but many are dying off fast. Due to pandemic lockdowns, e-commerce sales surged by more than 30% between the first and second quarter of 2020. With no end to the pandemic in sight, department stores are in dire straits.
The ‘Creative Destruction’ of New Tech
The 21st century has ushered in an era of massive disruptions on traditional businesses and industries. The coronavirus then forced us to rely even more on technology, which has accelerated trends that were already moving fast.
In the 1940s, an Austrian economist named Joseph Schumpeter coined the term “creative destruction” to describe how new tech dismantles old ways of doing things. Henry Ford’s assembly line is an example of creative disruption, but so is the advent of e-commerce or streaming services like Netflix.
Industries like newspaper publishing, department stores, taxis, and movie theaters could soon be pushed into history’s dustbin. These industries will likely take on new forms and employ workers in new ways. But the days of reading a print newspaper and hailing a yellow cab may be over soon.
Stay tuned to our blog for more helpful career and employment insights, such as the best Fintech companies to work for, what to expect on your first day of work at a new job, and important soft skills to include on your resume.
Nick Pipitone is a freelance writer living in the Philadelphia area that contributes regularly for Empire Resume. He has covered business and management topics extensively throughout his career, and he enjoys rooting for Philly sports teams and getting lost in used bookstores.