The national retailer said it will no longer sell Whirlpool brand products due to a pricing disagreement, according to reports. In addition to Maytag, Whirlpool manufactures Amana and Kitchenaid appliances, among other brands.

“Whirlpool has sought to use its dominant position in the marketplace to make demands that would have prohibited us from offering Whirlpool products to our members at a reasonable price,” an internal memo obtained by the Wall Street Journal and distributed to Sears employees reportedly reads.

The end of a long partnership

The sales partnership between Sears, based in Chicago, Illinois, and Whirlpool stretches back more than 100 years, when Whirlpool was known as Upton Machine Company. At the time, Sears took a stake in Upton, which gave it the capital to expand and ultimately become Whirlpool.

Sears has faced increasing competition from online sellers such as Amazon, as well as home supply discounters like Home Depot

Sears, which launched in 1893 as catalogue company Sears, Roebuck & Co., was once the nation’s largest retailer, maintaining that position into the late 1980s. Whirlpool is one of the largest appliance manufacturers in the U.S., where it’s responsible for 35% of all sales for washers. It has been raising prices to cover the costs of raw materials, according to reports.

Tough times for Sears

Sears has struggled in recent years with declining sales as so-called brick and mortar stores have faced increasing competition from online sellers such as Amazon, as well as home supply discounters including Home Depot.

Sears’ stock price has fallen by nearly half in the past year, and it hasn’t had any revenue growth in close to a decade, Bloomberg reports. It has also closed hundreds of stores in the last year, including numerous Kmart locations, which are part of its business.

For its part, Whirlpool’s stock has decreased by 4% in the past year, but it has increased 72% over the last five years.

Here are more details:

Sears will sell Whirlpool products, which include Amana, Maytag, and Kitchenaid, until it runs out of inventory. It will instead focus on other appliance brands LG, Samsung, GE, Frigidaire, Electrolux, and Bosch, according to USA Today.

In order to stay afloat, Sears is in the middle of restructuring its business, which includes more than $1 billion in cost cutting, consolidation of business units, and debt reduction.

Sales to Sears made up only 3% of Whirlpool’s total revenue, according to the Wall Street Journal.

The stock of both companies fell following news of the break up.

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But the retail sector has been in a slump in recent years.

What is the retail industry?

The retail industry is filled with big name brands you probably use almost on a daily basis. We’re talking about companies like Best Buy, Costco, Home Depot, J.C. Penney, Target, and Walmart, to name just a few.

These companies are often called bricks and mortar stores, because unlike online competitors like Amazon, they operate from physical stores where consumers come in to shop around and make their purchases.

But many of these stores are experiencing difficulties, because the way people are spending money is reportedly changing.

Retail sector: The challenges

Scores of retail stores have filed for bankruptcy or closed their doors in the past year, including RadioShack, Payless Shoe Source, and The Limited. And in the first four months of the year, the sector lost 72,000 jobs, according to a recent report by Bloomberg Businessweek.

That’s potentially a big problem because retail is also one of the largest segments of the economy, generating nearly $5 trillion in sales in 2016, according to the U.S. Census Bureau. That’s roughly one third of the Gross Domestic Product, or GDP, which is the total of all goods and services the economy produces.

Retail is also a big employer.

About 16 million people work for U.S. retailers, or one in nine people, according to recent reports. More than 8 million people work as retail salespeople and cashiers, according to the Bureau of Labor Statistics. That’s about five percent of the entire U.S. labor force.

So what’s going on?

• Increasing numbers of shoppers prefer to make their purchases online. E-commerce shopping is expected to grow by more than 40% to about $500 billion by 2020, according to research firm Forrester. Of course, Amazon is the 800 pound gorilla in online shopping, and in recent years it’s made big inroads in shopping, with easy return policies and services like Prime, which promise to get users deliveries within two days.
• But even some of the traditional retailers are launching their own e-commerce divisions, which can cut down on sales at bricks and mortar stores. And it turns out they are automating jobs that used to be done by people.
• There’s an oversupply of malls. And when big anchor tenants–the Macy’s and Sears of the world–don’t do well and decide to leave, there’s a spillover effect, reducing traffic to other retail stores.
• People appear to be spending their money in different ways–like going out more for dinner more, for vacations, and on the ever-increasing cost of health care, according to a recent report in The Economist.

Is there any good news for the retail sector?

It’s not all gloom and doom however. While e-commerce is certainly a growth opportunity for jobs, U.S. consumers still prefer to shop in stores for most products, according to this report.

The Bureau of Labor Statistics forecasts the number of traditional retail sales jobs to continue growing by 5% through 2024.

Key takeaways:

Consumer spending fuels the U.S. economy, and the retail sector is one of the biggest employers in the U.S. In recent years, the traditional retail industry has suffered from weaker sales and layoffs as e-commerce sales have continued to gain ground. Still, U.S. consumers still prefer to shop in stores for most items.

The post What to Make of All the Layoffs in the Retail Industry appeared first on Stash Learn.