Beyond that stare resides the coming shape of retail. But not yet.
Two Huge Facts.
Mall shopping is melting like our ancient ice pack. Retail hell is real with no end in sight. The strain is visible on the faces of employees. Roam the aisles, see the strain. Retailers are shrinking in both size and number, while some shopping center REIT’s say we sport a strong market for commercial landlords. Yes, in Dallas and New York. Looking for a Real Estate Investment Trust? Look at data center REITs, not retail space REITs. The damage in retail is visible everyday, in every direction. When have we witnessed three massive old-line retail chains in big, very big, trouble? In two years will we still have Macy’s, or J.C. Penny, or Sears, or K-Mart? Sears Holding stated that “questions exist concerning our ability to continue as a going concern.” Translation; “We’re finished.”
A new Credit Suisse report calls for 8600 mall failures in ’17. From all angles that’s called devastation.
Will the social fabric of America fray as retail’s temples decay?
An empty parking lot yo. Such dystopian notions serve well in describing the queasiness retailers must now swallow daily. So exactly how hard is that? Hard. Sailing the battered retail ship requires a smiley public face. The precise circumstances of Target, TJX, and Costco are certainly less dire–Costco is fine, actually. Everyone still grapples with challenged foot traffic, and food deflation. That math says lower revenues. Apparel makers like Under Amour, VF Corp, even Nike and LULU, are being savaged. Are you sitting on shares of any of those companies? Ever seen “dead money?” It looks precisely like what remains following a 40% drop in a stock that will not be coming back. Hum…UAA?
Remember that flimsy punk Chicken Little? Well, even that twerp can’t ring the retail alarm bell loud enough.
Who is winning amid our global secular trend away from traditional fixed retailing? Yes, of course e-commerce will replace everything. That is with the exception of home building supply, Home Depot, and gravel pits. How, exactly? Lots of big trucks and almost no people.
Shopping, like sex, is an international language. April in Paris is romantic, yet perhaps that sentiment was really about shopping the Champs Elysee.
Most people light up when simply hearing about that fab”City of Light.” You’ll find the exact light in the eye of a shopper on a scent. Yet nightly across America trucks roll, bathed in that atomic-orange sick of sodium-vapor parking lot lamps. JG Ballard gets it. As we the shopping public sleep, another anchor store is dismantled. That anchor dream of chain retail departed by truck before dawn. Steam engines are fine, yet we possess no place to put them. Macy’s and Sears were fine, but do they or their kind have any viable place today? If so it’s up to them to create. This minute–they inhabit some still Retail Twilight Zone.
Can retailers make out the low drone of their music service as their pricey operations sink to deathly quiet.? Will the Macy’s Santa be listening to wish lists from the seat of a fork-lift this season?
Peter Lynch loves Santa, and gravel pits. This season Peter hopes for a gravel pit in his stocking. Why? He tells us straight. Wide moat. No one can poach on your service area due to the prohibitive cost of shipping. Nor can China undercut your price, or steal market share. There is no gravel 2.00. Your product can not be damaged in shipping. No “defects of materials or workmanship” are even possible–thus no customer complaints, or lawsuits, concerning product. No facilities are required to store your product, beyond space. And an idiot could run the business.
“I prefer businesses that can be run by an idiot, because sooner or later they will be.” Peter Lynch
Retail’s No. 1 problem is of course e-commerce. Most have a foot in both worlds yet find no balance.
Shopping malls nationwide are sort of like shinny gravel pits now. Pump some canned music in and look between your fingers–shopping mall. Why? There’s nobody there. Everyone is at Amazon.
Amazon will be around. Therein lies retail’s No. 2 problem. Want opinion? Buy AMZN when it rests a second, $950sh. AMZN will be around, around the world. Amen.
This is still America and that means shopping, in malls. Retail industry insiders keep saying the precise same thing. The future of collectivized shopping will be experiential. We are Americans. Americans love a good show. Who doesn’t.
Images sourced from Pixabay.