As the wealth of middle-class consumers hemorrhaged during the Great Recession, so did the retailers that catered to them.
Circuit City, Linens 'N' Things, KB Toys and Levitz Furniture have disappeared, while Starbucks, Blockbuster, Ann Taylor, Gap and Ritz Camera have closed hundreds of stores.
Even as retail sales improve and the recession is officially behind us, the bleeding is likely to continue.
"We are still way over-stored in the U.S.," said Sherif Mityas, a partner in the retail practice at A.T. Kearney. "The casualties will come in that middle range."
During the past decade, retailers rushed to appeal to the free-spending, upwardly mobile middle class. Stores that sold clothes, furniture, household décor, expensive coffee, garden equipment, candles and soap cropped up like dandelions.
Those consumers now are stuck in homes losing value, with tanking investments, shrinking wages and stifling debt.
The result is a barbell effect in the retail industry. Discounters and luxury brands are rebounding, while the vast middle continues to flounder. Too many brands and too many stores are trying to persuade an ever-more-practical consumer to come and spend. During the recession, chains such as Christopher & Banks, Lane Bryant, Men's Warehouse and Chico's lost ground to off-price retailers such as T.J. Maxx and Marshalls. On Friday, TJX Companies Inc. said it would convert 91 of its floundering A.J. Wright stores in the northeast into T.J. Maxx, Marshalls or HomeGoods, and close the brand's 71 remaining stores.
Bookstores, once a mainstay of malls and strip centers, continue to disappear. Waldenbooks and B. Dalton disappeared this year. Now, Borders' largest shareholder is trying to buy out Barnes & Noble and merge the two mega-booksellers.
Sears and Kmart have seen same-store sales declines. Other department stores, such as J.C. Penney, Dillard's, Kohl's and BonTon's brands, are fighting to differentiate themselves.
Macy's has picked up some of their market share, finally finding some footing by tailoring merchandise to local markets and adding exclusive brands -- such as Tommy Hilfiger and Madonna's Material Girl -- to its staple of house brands.
"The key is identity," said Mityas. "You see Macy's and certain retailers creating an identity for themselves. Others don't know what they stand for. That's the kiss of death in retail. Why would people come to your store as they drive by dozens of others?"
"If this turns out to be a lousy holiday season," expect a bloody first quarter, said Ken Perkins, an analyst with RetailMetrics Inc.
"The middle market was having difficulties before ... the recession," he said. Retailers "were feeling squeezed by the inability to compete on price with the low end and an inability to compete on services at the high end. Now there's this fight in the middle for market share of a stagnant pie."
Tina Wilcox, CEO and creative director of Black, a Minneapolis retail brand agency, ticks off five things affecting the middle market: global competition from the Internet; foot-dragging on getting into e-commerce for fear of cannibalizing their brick-and-mortar stores; lack of differentiation; and getting beaten out on price because they're not as big as Wal-Mart, Target or other category killers.
"But the No. 1 cause of the downfall of the middle segment," Wilcox said, was that consumers "consolidated unnecessary trips." They went to fewer stores and spent less time -- and money -- once they were there.
High-end specialty stores that offer great promotions are squeezing out some middle-market retailers, said Mary Van Note, co-founder of Ginger Consulting in Minneapolis.
Banana Republic and Ann Taylor have "brand cachet" that consumers want. Ann Taylor Loft, the sportier and less expensive brand, keeps promotions simple, Van Note said, with 40 percent off storewide, unlike Macy's, which sometimes irritates shoppers with the long list of limitations on their deals.
Kohl's, with its "very, very clear bargains, is doing fabulously well," said Van Note.
"The middle-income consumer tends to have things to buy for the husband, kids, grandkids, aging parents. They don't have a lot of time or money," she said. "They need to have the deal, and it needs to be simple."