People browse liquidation items at the Hudson's Bay store in the Toronto Eaton Centre in May, 2025.Cole Burston/The Globe and Mail
Doug Stephens is the chief executive of Retail Prophet and the author of The Future of Competitive Advantage: A Business Plan to Save Your Customers, Your Company and Democracy.
For more than two decades, a structural force has been reshaping North American retail: the systematic erosion of the mid-tier. Brands and formats that once thrived serving middle-income consumers found themselves caught in a fatal no man’s land – too expensive for the price-sensitive shopper trading down to Walmart, Temu or Shein; too ordinary for the affluent consumer seeking premium experiences or luxury brands.
The list of casualties is long. From once-ubiquitous anchor tenants such as Sears and Hudson’s Bay to specialty retailers like Cleo, Bootlegger, Bombay Company, Bowring and Pier 1 – to name but a fraction of the fallen. What began as a trickle in the mid-2000s became a deluge, with retail insolvencies surging 73 per cent year-over-year by March, 2025.
Given the steady cadence of these closings, it’s been easy to grow numb to them. The goods these brands sold can be found elsewhere. The cavernous malls they once inhabited are of diminishing commercial value in a world where anything we want can be on our doorstep with two taps on a smartphone.
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But our capacity to fill the material void these brands leave is beside the point. The death of mid-tier retail should concern us all – because those empty storefronts are a direct reflection of our society.
The mass prosperity of the 1950s, 60s and 70s gave birth to much of the retail now decaying around us. We have arrived, instead, at a world of thriving luxury malls at one end of the income spectrum and resale shops, dollar stores and discount chains at the other. E-commerce accelerated the decline, but the root illness has always been economic. Artificial intelligence will only deepen it, further decoupling business productivity from the need for white-collar labour and concentrating the gains accordingly.
This isn’t merely a retail problem. It’s a societal one – for two reasons. First, the wealthy cannot buy enough to fill the hole the middle class is leaving behind. The rich may buy more expensive socks, but they don’t have more feet to put them on. Second, every new closing drives greater market share into the hands of already-enormous companies like Walmart and Amazon, creating a monopsony dynamic that pushes employee wages down and consumer prices up. When markets concentrate, everyone loses – workers, consumers and suppliers alike, exacerbating the downward spiral and further widening the mid-market chasm.
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And the damage runs deeper than economics. Extreme polarization erodes faith in public institutions, in the basic fairness of capitalism and ultimately, in democracy itself. In a May, 2023, survey by the Angus Reid Institute, fully one-third of the 1,600 Canadians polled claimed to have lost all trust in democracy. It’s hard to blame them. Democracy did not insulate them from the reality of a K-shaped economy, with growth for the top 20 per cent of earners and stagnation for the rest.
None of this is new. It is the result of a 50-year march toward a society of haves and have-nots – a co-production of business and government, from both sides of the aisle. From the automation and offshoring of manufacturing in the 1970s and 80s to the spectre of AI causing a white-collar wipeout today, the gains of rising productivity over the past half century have flowed almost entirely to capital and away from labour. What we are witnessing now is simply the harsh inflection point – the visible tip of a very large iceberg.
Those closed stores and hollowed-out shopping centres are a bellwether, for where our society stands today and where it is headed. And whether they recognize it or not, every business has a stake in reversing the trend, including those benefiting from the fallout. The long-term health of the consumer economy, and of our society, depends on it.