Try this experiment: Look around your town and think back to what it looked like 10 years ago. Chances are, the stores that line the streets or anchor the malls are different. Circuit City, Linens-n-Things and Radio Shack are all gone. In their place are names like Nordstrom Rack, Saks Off Fifth and Zara.
It's a physical representation of how the consumer has changed over the last decade. The financial crisis of 2008 left an indelible mark on consumer behaviors that still affect how Americans spend today.
"Cheap was in," recalled Larry Meyer, who worked as chief financial officer at discount retailer at Forever 21 at the time. "We were all shocked. I stopped doing real estate deals, ... but it wasn't bad for everyone if you had the resources to take advantage of it. But even the luxury guys had trouble."
The collision of the millennial generation beginning to enter its earning years and the biggest economic downturn since the Great Depression created a shopping base markedly different from its predecessors. Some of those changes were indirect — millennials had a hard time finding a job, thus delaying their entrance into adulthood and changing their shopping patterns.
Declining sales made retailers face a reckoning that the industry had added too many stores when times were good. Technology further drove home the reality long after the recession ended, and prolonged recovery.
Other shifts, like the drive for a deal, were more direct. Lehman Brothers filed for bankruptcy on Sept. 15, 2008, just before the holiday season, signaling the start of the crisis. The crash of an esteemed bank caused consumers to hunker down, leaving retailers with so much product they were forced to slash prices by as much as 80 percent to draw shoppers in, not just the typical half-off deal. Those sales extended far beyond Christmas. The discounting taught consumers there was no need to pay marked-up prices or even list prices. Those changes stuck around.
"We've conditioned consumers to wait for the deal," said Rod Sides, who heads Deloitte's U.S. retail practice.
That focus on deals and discounts affected retailers on the high and low ends and laid the groundwork for discount and off-price retailers to thrive. T.J. Maxx was a key beneficiary of this shift, and its stock has outperformed the industry average by 6 percent, on average, over the past five years, while Ross Stores shares outperformed by 17 percent.
Department stores like Macy's, Saks and Nordstrom, meantime, began to push their own discount models, as their premium stores saw growth flatten. Nordstrom this past quarter generated roughly 30 percent of its sales through its off-price business, Nordstrom Rack.
Luxury brands have made their own changes. Players like LVMH were caught off guard during the recession when flash sale websites like Gilt Groupe sprouted up, offering their excess inventory at a far steeper cost. Those brands had not previously had to focus on limiting their inventory or building an online presence.
In the years since — and in preparation for the next recession — LVMH rolled out websites for brands like Christian Dior, Bvlgari and Marc Jacobs, to create their own channels directly to consumers. That line allows them to better control product and price.
"The last recession taught people rules about how to handle it differently," said Aaron Cheris, a partner with Bain & Co. "They will find a way to control pricing and inventory even if that means a bigger hit to the top line."
Nearly all retailers have focused on store brands, where retailers can offer shoppers items at a cheaper price. Target's private label children's Cat & Jack line is one example. It has reached $2 billion in sales. Amazon has more than 80 in-house brands that sell diapers, cleaning items and pet food.
The recession also taught retailers a lesson they had probably suspected but were forced to confront: There were too many stores in the U.S.
Although the amount of retail square footage has continued to climb following the Great Recession, the pace of growth has slowed dramatically. Since 2010, new retail being built has averaged about 48 million square feet a year, real estate research firm CoStar said. That's compared with an average of 172 million square feet from 2000 through 2008, the group found in surveying 54 of the largest markets in North America.
Retailers had long viewed the U.S. as a white space through which they could grow sales simply by building new stores. The private equity firms, which had purchased names like Payless ShoeSource and Claire's, exacerbated the issue by looking to give their investors growth simply by building new stores.
"The retailers were effectively getting pushed [by analysts] to open new stores," Hans G. Nordby, managing director of CoStar's market analytics division, told CNBC.
"In terms of demand, people really did show up, ... but that stopped," Norby said, pointing to the Great Recession.
From 2003 to 2004, retail sales grew a robust 6.3 percent. But as the economy weakened, so did retail sales. From 2007 to 2008, sales inched up only a half a percent, then from 2008 to 2009 retail sales dropped 3.6 percent. When shoppers stopped showing up, retailers were all left suddenly with onerous, unprofitable real estate, magnifying the pain of plummeting sales.
The result: In 2008, 87 million square feet of retail space went dark, according to CoStar.
Retailers learned it takes less time to realize the problem than it does to fix it. Given long-term leases, retailers can't simply downsize overnight. The process of shuttering stores is especially painful for public companies that must brave the impact that the closures will have on stock prices.
"Every company went into shutdown mode, cut costs, close underperforming stores," said Deloitte's Sides. "That major contraction all happened simultaneously." Stronger companies were able to adjust, but it was a death knell for already-struggling retailers.
"I'm generally not a believer that millennials are so wildly different than generations before," said Bain's Cheris. "What's different more than anything is they've postponed major life events."
The population that graduated college into the recession carry the weight of debt they accumulated in school and the scars of seeing its risks by living through the recession. Many of them also faced delays in their careers and wage progression as a result of unemployment or underemployment after college.
In December 2007, the national unemployment rate was 5 percent, as it had been for the previous 30 months, according to the U.S. Bureau of Labor Statistics. When the recession ended in June 2009, the unemployment rate rose to 9.5 percent. Millennials were graduating into this environment, and that experience lingered even as the economy recovered and the unemployment rate shrank, most recently to 3.9 percent in August.
The end product is a generation that has waited longer to marry and start a family and take on the costs accompanied with those responsibilities such as buying a home. In 1960, the average age women and men first married was in their early 20s; today, it's closer to 30, CNBC has reported.
As money has begun to flow more bountifully for that generation, they are now spending money differently than their parents did at the same age. An unmarried 30 year old is more willing to spend on experiences like concerts and trips they can post on Instagram than would someone who is married with kids.
"The short answer is when they get married and have kids, they look identical," said Cheris.
Despite the short-term cause, the shift is expected to last. The millennial generation has set a precedent for marrying later.
Consumers now also have more products to purchase beyond every-day luxuries like apparel and shoes — there are wireless plans, music subscriptions — as well new spending models like car-sharing and house-sharing. Amazon, meantime, has become a retail giant, training consumers to expect products quickly and cheaply, brand loyalty be damned.
Society also is more casual than it was a few decades ago. If you can wear jeans to the office or to a fancy New York City dinner, then you don't need as much dressier attire.
As such, while spending has rebounded since the recession, the proportion shoppers are spending on apparel has declined. Apparel and footwear comprised 11 percent of all retail spending in 2003 and just 9 percent of retail spending in 2017, according to Euromonitor.
"Fundamentally, as prices have come down in retail, that has squeezed out many retailers," Meyer said. "My sense is that is still true today." Shoppers still have a higher sense of price value, he said, and apparel is less of a focus when shoppers think about their budgets.
That's really weighed on apparel companies. Shares of Ralph Lauren have underperformed the industry average by nearly 12 percent during the past five years, according to Factset. Shares of Gap have underperformed by 0.6 percent.
It is unlikely that the next generation will forget the lessons learned by their elders and resort back to prolific spending on products, said Robin Lewis, consultant and author of the Robin Report.
"One of the reasons this country isn't going to bounce back to what we used to have — we have an aging population that is not being replaced by this younger generation," said Lewis. "They will be in numbers but not making as much money, not spending as much."
That permanent impact, said industry experts, means there may be new reckoning to face as the advent of online shopping allowed for a new cohort of retailers to multiply in the years that have followed the recession. These new retail companies launched their businesses online and built their brands unencumbered by costly stores and past debts. Among them, Bonobos, Warby Parker and Allbirds, used the internet to grow their reach. Now established, they are chartering new territory by launching stores slowly and methodically.
"I'm not sure that there is going to be a 'normal' again in retail," Warby Parker co-founder Neil Blumenthal told CNBC earlier this year. "Companies like Warby are lowering prices, making things easier and more fun to shop. Those are the companies that are going to survive."