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America's 'Retail Apocalypse' Is Really Just Beginning (bloomberg.com)
An anonymous reader quotes a report from Bloomberg: The so-called retail apocalypse has become so ingrained in the U.S. that it now has the distinction of its own Wikipedia entry. The industry's response to that kind of doomsday description has included blaming the media for hyping the troubles of a few well-known chains as proof of a systemic meltdown. There is some truth to that. In the U.S., retailers announced more than 3,000 store openings in the first three quarters of this year. But chains also said 6,800 would close. And this comes when there's sky-high consumer confidence, unemployment is historically low and the U.S. economy keeps growing. Those are normally all ingredients for a retail boom, yet more chains are filing for bankruptcy and rated distressed than during the financial crisis. That's caused an increase in the number of delinquent loan payments by malls and shopping centers. The reason isn't as simple as Amazon.com Inc. taking market share or twenty-somethings spending more on experiences than things. The root cause is that many of these long-standing chains are overloaded with debt -- often from leveraged buyouts led by private equity firms. There are billions in borrowings on the balance sheets of troubled retailers, and sustaining that load is only going to become harder -- even for healthy chains. The debt coming due, along with America's over-stored suburbs and the continued gains of online shopping, has all the makings of a disaster. The spillover will likely flow far and wide across the U.S. economy. There will be displaced low-income workers, shrinking local tax bases and investor losses on stocks, bonds and real estate. If today is considered a retail apocalypse, then what's coming next could truly be scary.
"...There are billions in borrowings on the balance sheets of troubled retailers...The debt coming due, along with America's over-stored suburbs and the continued gains of online shopping, has all the makings of a disaster."
Thousands of balloon/ARM mortgages approved for unqualified borrowers also had all the makings of a disaster back in 2008 too.
There's a common trait in the human race that spans thousands of years; a propensity to never fucking learn.
And over-stored is right. It's ridiculous just how many damn choices there are within a mile-long stretch of suburbia. No wonder so many are closing.
Apple stores are doing just fine. But Apple stores are about the experience, much like a movie. Going to Sears or Target or Walmart is like taking a dump. You have to do it so just get it over with and get back to your life.
One reason restaurants are still hot is because they can be an experience. If more small retailers began to understand that it's not about inventory it's about the experience maybe we can get things turned around. Adding things like customer education (advice on accessories for clothing, for example), and of course competent employees (who are actually permitted to help the customer) are always welcome too.
"Well, good luck finding a judge that doesn't run a bestiality site."
The root cause is that many of these long-standing chains are overloaded with debt -- often from leveraged buyouts led by private equity firms.
On the weekends, Costco usually has 10 lanes of cash registers with 10 people in line each, with baskets loaded to the top, followed by long long lines to pass by receipt checkers to exit the building...The downfall of "retail" isn't all about Amazon.com and online clicks, it also includes the rise of these warehouse stores that sell superior quality produce and products (except for their accidentally unauthorized jewelry and slightly obsolete electronics) as well as buying basic household goods in bulk to reduce cost in a country that has had depressed wages for twenty years. Because of the lower overhead, warehouse stores can be a much cheaper way to buy things than ordering online from Amazon and still offer some of the seasonal and local customizations that Department stores once did.
I need to hurry up and film a zombie film in our local Sears before they close they place down completely.
Going in there is creepy as hell.
>>... unemployment is historically low...
Total bollocks. It's only listed that way because the feds lie about how they count unemployment.
If you include the total, real world number of those who have been out of work for longer than a year, forced to work part time, and those on public assistance, the number is in the double digits.
So rise up, all ye lost ones, as one, we'll claw the clouds.
To be fair here, Sears's problems are in part due to the mismanagement of their randroid CEO, not just the issues facing retail as a whole. They could be doing better, if they weren't being run into the ground. Compare Sears/Kmart to Target for example.
BINGO. 10 years ago, online was often junk while retail was quality items. Now, retail sells the same garbage items that the online stores do. There's no differentiation any longer. You can see this when you go to sears.com or walmart.com and half the products are "online only." They are all trying to be Amazon.com. The retailers that survive will be the ones that stop trying to compete in the "race to the bottom."
Sears is the my favorite example. People used to buy Sears appliances, even though they were overpriced, because Sears curated the models with the best reliability and offered longer warranties and local service. Now, Sears products are just rebranded versions of the mid-range to low-end items, they don't have better warranties, and service is now farmed out to 3rd-parties. If the item is 50lbs then you often have to mail it out for service. I am totally okay with paying 200% to get something that lasts twice as long. But so far, I don't know who offers me that any longer.
Apple is one company that isn't competing in the race to the bottom, and is doing well with that approach.
Retail is having the same issue the cable television industry is having - the economics have changed and they haven't found a way to adapt. I don't need to drive to a big box store or a mall to pay 300% more for something when with a bit of patience it comes to my house for a lot less.
Businesses can only adapt so quickly because sudden, big reactions prompt panic from investors and that tanks the whole company--if they can't borrow money, they can't run.
Example: here in Houston, the oil and gas industry has had multiple rounds of layoffs, even though oil prices stabilized shortly after the big crash two years ago. Why are they still firing people if they have settled? Easy, they never finished and it was part of the plan. If you needed to cut 20,000 workers, you can't do that in one day. The market will freak out as well the non-fired employees, who may leave in fear that the company will become insolvent (thus making it a self-fulfilling prophecy) or they will otherwise lose their job. Beyond that, the company misses the numbers and needs to hire...that's money that's been wasted in both the firing and the hiring; further, their ability to hire given that they just let 20,000 people go will be severely compromised.
Furthermore, you can't just scale down operations in a single day and get rid of that many people. You need to train people to do different tasks, figure out where the duplication is, etc. If facilities need to close, that also takes more than 2 days to do.
Instead, they lay-off a few thousand at once. Some may leave at that point and that helps the company tremendously. Then they wait a few months and do some more. More people may also leave voluntarily, solving some of the issue. They then layoff more a year later as planned. The business has time to adjust gradually and the market doesn't crush them in the process.
Ok, that took more words than I expected. My point is this: retail has been established as it is for half a century. It's not simple to change their infrastructure and pricing models in short order or any order, for that matter. They can't very well say "We will cut distribution costs by eliminating the middle-man" because the middle-man doesn't want to be eliminated and the OEM finds him useful because they can deal with just him, not 400 smaller companies.
The amazing thing about Sears (and Penny's, too) was that they started 100.00% as mail-order only.
It wasn't until later that they felt a need to go brick-and-mortar - but they still kept their catalog business.
Amazon shouldn't exist - Sears should have had an easy transition from mail/phone orders to https:// sales.
Crazy!
CAP === 'calcuim'
Need I say more?
It's a little ironic that Sears is on the way out these days. A big part of their business used to be the Sears Catalog for mail order. They were basically doing what Amazon is doing before the Internet existed!
"What the American public doesn't know is what makes them the American public." -Ray Zalinsky (Tommy Boy)
Many people used to buy Craftsman tools due to high quality (compared to almost any other consumer brand) plus the lifetime warranty - the math made sense. But for years now the majority of Craftsman tools for sale are made in China ( https://en.wikipedia.org/wiki/... ), the quality has plummeted to Harbor Freight levels, and every time you get a warranty replacement the quality drops. Normal MBA thinking - how can I goose profits this quarter, and my golden parachute will carry me out the door when things go bad. This thinking across American business is whats killing American retail. Why buy crap from Sears or Wall-Mart when I can get slightly better crap faster on Amazon? Or if you don't mind waiting, roll the dice and order your crap directly from China. Related, no connection or affiliate code - I don't go to hobby stores any more, I go to https://hobbyking.com/ . Sure, sometimes the parts that arrive are bad, but most of the time its exactly what the local store offers, at 1/3 the price. If people (in general) don't want (to pay for) quality, and business managers don't care about killing the business, then everything is short term now. Silly people don't realize that trickles down to their own jobs. Or already has.
Sounds a lot like trickle-down theory. Did I just get transported back to the 1980s?
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
It can't win on convenience, it can't win on speed, it can't win on experience. It is a monoculture of price reduction
It's been a monoculture of selling lower quality with worse service at a lower price than the competition for a long, long time. Sears drove away mom and pop stores several decades ago, K-mart essentially drove Sears out of business a few decades ago, Walmart drove K-Mart out a couple of decades ago. Now it's Walmart's turn.
There won't be an apocalypse, just another iteration of the same cycle.
Trying to serve the poorest people - who only shop at the places with the lowest prices - is part of the retail problem. If the store is focused on low prices, they can't afford to focus on anything else. This is how Wal Mart came to be reviled by anyone who can afford to not shop there.
Why not just look at the price and stop worrying about everyone else and whether they got a better deal? Why do you care if an item is 20% off of $12.50 or it's $10? Is the product worth $10 to you? Buy it. Fuck the posted discount rate. Ignoring sales, coupons, discounts, et al, is part of being a responsible shopper.
No, I kinda ignore it 'cuz there's still a whale of a lot of people that traipse in and out of any US car manufacturer's factory in spite of the fact that they are some of the most automated factories in the country. So, it seems that they still need people for SOMETHING, implying that there's lotsa stuff that can't be automated. Yet. Sure, robots will do more and more, but I'm waiting for someone to show me one that can walk thru the factory, hear the bearings going bad in a 50 hp motor on a press about 25 feet up in the air, go get a lift and a spare motor, get up there and change it out, remove the old motor back to the shop and rebuild it with new bearings and maybe brushes, and put it back in stock as a spare for the next time. Find me a robot that can do that. There aren't any. There aren't going to be any truck driver robots that can jump out and change a flat on the inside dual, either, for a long time. People will always be necessary up until its so automated that we can all use personal slaves who are robots, and never again have to do a damned thing that we don't want to do. It may never be seen by anyone alive today, 'cuz that's still a lot of tech to be invented.
Bruce Bartlett is a leftist shill whose opinions are manufactured to support whatever globalist / communist theory that the left thinks they need supported. The left especially doesn't like the freedom from governmental interference that comes with something like a Fair Tax, so he attacks and attacks it. He is simply wrong.
A guy who served under Reagan and Bush I is a "leftist shill"?
The AliExpress sellers seem to have realized that people are generally okay if they get something that doesn't work as long as the problem is quickly rectified, so it's cheaper to cut manufacturing costs a bit and send replacements. In practice it's often the case that if the factory tests the board and it fails they just chuck it for all but the simplest fixes anyway, so really they are only out the cost of shipping.
They are also less suspicious. A western eBay seller would want to know how you tested it and have it back for inspection to make sure you didn't blow it up. The Chinese sellers just take your word for it and ship another one, and it's probably fine for them because there aren't many people who bother to screw them out of a second spare board.
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SJW, n: "Someone I don't like, and by the way I'm a fuckwit" - AC
his thinking across American business is whats killing American retail. Why buy crap from Sears or Wall-Mart when I can get slightly better crap faster on Amazon? Or if you don't mind waiting, roll the dice and order your crap directly from China.
In related news, China's dictator recently announced a crackdown on fraudulent Chinese sellers to overseas markets. If ordering direct from China stops being a risk, look out US retail! Even Amazon will be threatened.
Socialism: a lie told by totalitarians and believed by fools.