Stunning acceleration of a trend.
On the surface, it was the same lackadaisical data we’ve become inured to in this wondrous economy. But beneath the surface, there lurked a nightmare for the already struggling brick-and-mortar retailers.
Total retail sales in July, at $457.7 billion, remained stubbornly flat from June, and ticked up a measly 2.3% from a year ago, adjusted for seasonal variation and holiday and trading day differences, but not inflation, according to the Commerce Department.
As crummy as it was, it was propped up by sales of motor vehicles and parts, the largest category at 21% of total retail sales. They rose 1.1% for the month and 2.4% year-over-year to $93.2 billion. Auto sales have been booming. In terms of unit sales, they set an all-time record last year, funded by cheap debt and loosy-goosy underwriting standards; so comparisons this year are on top of a year that may be hard or impossible to beat for a while, with the industry already talking about a “car recession.”
And here’s what else propped up retail sales: Sales by “non-store retailers,” which includes e-commerce, soared 14.1% from July last year to $47.7 billion, now accounting for 10.4% of total retail sales. Their share has doubled since 2002.
So retail sales without autos and without non-store retailers – an approximation for brick-and-mortar retailers other than car dealers – came in at $321 billion in July not seasonally adjusted. A year ago, they were also at $321 billion. They have not moved one iota over the past year. And they’re up only 2% from two years ago.
That’s not counting the impact of inflation. CPI rose about 1% over the two-year period despite the collapse of energy prices. Adjusted for CPI, these retails sales might have gone up only 1% over a two-year period.
The US population grows at a rate of about 0.8% per year currently, according to the Census Bureau. So on a per-capita basis, and adjusted for inflation, these brick-and-mortar retail sales might have actually declined over a two-year period! A grisly thought for brick-and-mortar retailers: on average, each individual consumer might already be buying less there than they used to.
That non-store retailers have been kicking butt at the expense of brick-and-mortar retailers is by now well established. The entire brick-and-mortar industry is fretting about it. Big retail chains specialized in clothing and accessories are struggling with stagnating or now declining revenues. There has been a tsunami of bankruptcies by chain retailers. Mall owners are starting to worry about incessant store closings, including the 141 Macy’s stores; they’re beginning to bite. Eventually, the brick-and-mortar retail debacle will hit mall REITs and commercial mortgage-backed securities.
This has been a slow-motion development that had been denied for its first decade or so, as malls were considered something American consumers could not possibly live without.
And then, as online shopping picked up momentum, brick-and-mortar retailers belatedly tried to gravitate that way too, with only mitigated success. And now, stagnation, at best, has set in for them.
This chart shows retail sales minus non-store sales (blue line) and retail sales minus auto sales and minus non-store sales (black line). Note the circled phase of stagnation. At the bottom, non-store retail sales (red line). At 10.4% of total retail sales, no one is denying their impact on brick-and-mortar anymore:
What the chart above doesn’t show is just how rapidly non-store sales have been shooting up from a very small base. The chart below shows the share of non-store sales as percent of total retail sales (red line, left) and in dollars (blue line, right). This is where non-store sales are turning into a nightmare for brick-and-mortar retailers: note how both the dollar sales and the percent share of total retail have soared since late last year – a stunning acceleration of a trend:
“Declining relevance of brick and mortar stores,” is what Krishen Rangasamy, Senior Economist at Economics and Strategy, National Bank of Canada, called this. He did some additional math about the phenomenon and concluded:
[T]he second quarter took that outperformance to a whole new level, with a record 23% annualized jump for real non-store retail sales. That explains why US goods consumption growth was so strong last quarter.
As Millennials, who are big online buyers, are moving in larger numbers into the workforce and advancing on the income and purchasing ladder, the acceleration of that trend toward online sales that we are suddenly seeing is likely to continue. Any forecasts of a leveling off of the share of online sales – and the chunk they’re eating out of brick-and-mortar retailers – will likely have to be revised. For mall-based retailers, this is going to get uglier even faster than imagined or feared.
As retailers like Macy’s are losing their footing, they try to paper over it artfully, and stock market jockeys feed on it. Macy’s sales dropped 4% in the second quarter from a year ago. Net income plummeted 95%. It had already closed 41 stores last year. Now it’s going to close another 100. And yet. Read… Profits Plunge, Sales Drop at Macy’s. Slashes Jobs, Closes Stores. Stock Jumps 18%
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“They have not moved one iota…”
“Officially” Correct.
The Wall street retail sales consensus estimate was +0.4% in a range of +0.2% to +0.7% The result is 0.0% Flatline. No pulse. Dead.
This is according to “official” stats as per CPI and data adjustments/revisions. The true picture must be really dismal.
The mall near me is in a death spiral. In the past year and a half, Sears and Macys closed. Elsewhere in the mall, I’m told the vacancy rate is about 25%. Some days, there are more geese in certain areas of the parking lot than cars. I’m betting JCPenny will be the next store to close. That would probably be a tipping point for the rest of the mall.
I was in a local upscale shopping area the other day and walked into a couple of stores. One was a women’s store, a very middle class brand, with average prices. There was nothing, fashion wise or price wise, tempting me to buy. The other store was a local jewelry designer. Most of the jewelry was so basic in design I assume the “local” label is what people are buying. Nothing in those stores was tempting.
Every month I get a fashion magazine and for years now I have seen the design quality of designer items diminishing, while the prices are rising astronomically. I am seriously considering ending the subscription, even though it is only $12. We seem to have entered the dark ages of quality and design. I am not surprised retail is flat. Even if I had a larger budget, I would not buy most of the underwhelming merchandise currently available.
Yves Smith of the Naked Capitalism blog calls this the Crapification of Everything.
It’s found everywhere, except among “artisanal” products for the 1%, their courtiers and their professional apparat.
I subscribe to many fashion and home magazines. But I do so with a disposable debit card bought with a specific amount on it. That way the subscription cannot be renewed.
Maybe it’s not bad design. Maybe it’s the depressing, repetitive flood of “stuff” offered up by commodity capitalism? How can anything seem special if we don’t need it and only want it because we are so damn bored?
I hear you.
But think of what happens if people stop buying more ‘stuff’
Here’s a good summary:
Our most recent history shows that the slightest slowdown of our current economy by just a few percentage points brings an immediate chaos of unemployment and global destabilisation. Yet somehow that won’t apply to a permanent ‘downsizing’; that seems to follow a different set of social rules, as if we can do it and still retain a civilised existence.
And of course without downsizing wages too much. We will still expect to eat, buy ‘stuff’ and carry on in employment and even retain our wheels, with the strange certainty that as long as we have wheels, we will have prosperity by involving ourselves in the exchanges of trade that will not differ much to what we have now.
http://www.endofmore.com/?p=1464
It is a rather sorry state of affairs… one that cannot continue
You are very right innovation and good taste was killed by multiplication for masses. It did not happen just in fashion business it happened all across the board.
Personally in my circle of friends I see shift to buying less and buying quality products and these are not all necessary wealthy families.
yep. People buying less, but buying quality. Consignment stores have the old style quality and are owned by proprietors. I’m loving this collapse!!!!! Bring on the end of the chains, which feed corporate profits and controls. Bring on the end of fast food with its frankenfood crap. Bring on the end of the American Dream…..let’s all wake up and make new choices: to not debt, not use big banks and not vote for fake choices.
Well said could not say it better. I would add one thing ( personally, for me, at least ) : how many of us regulars at this site – – between the ages of 40-ish and 60-ish – – actually need more stuff after we achieve food, housing, water, clean clothing and transportation ( meaning gasoline & insurance ) for the month ?
I do not buy clothing ( especially “fashionable” clothing ) or jewelry, or shoes or coats. I do not buy furniture. Nor do I upgrade my automobile until it practically ceases to run, leaving me with no residual value.
The fact that I live in suburban America, surrounded by people who “buy things” incessantly, distresses me. Not just clothes and jewelry and HUGE TVs and the latest I-gadget every year – – – but massive Escalades and Yukons and Explorers and Expeditions and Excursions, etc. All of which few of the buyers can actually afford.
And all of this excess and wasteful buying is an abomination against good sense and the planet. That’s how I feel . . . .
Yes, I know I am a Puritan, been called that much of my adult life. I subscribe to no formalized morality, but I do abhor waste and wasteful behavior.
I will enjoy seeing it all end, finally, at long last.
SnowieGeorgie
Be thankful that they continue to shop — because if they followed your lead — jobs would be shed – leading to less consumption and more jobs shed…
And eventually a deflationary death spiral for the economy
You know we are in trouble when….fashion magazines overuse of beige.The current baggy styles are of what I would envision in woman’s prison. N W O?
The Boomers are old and many are fat. Welcome to beige!
The “stuff” cycle is over. The upside? State and local sales tax revenues will plummet…..federal tax revenues will plummet. Voila! Less government!!! I call that a NET GAIN.
I’m happy to see the economic downturn if it means less government.
There is the old Will Rogers monologue from the depression era that describes this. He asked a friend how he had gone bankrupt, and the friend replied “at first it was little by little, and then it was all at once.”
Isnt that quote from Earnest Hemmingway “The Sun Also Rises.”
One blogger goes on about the supposed prevalence of online sales; another’s kick is “driverless cars” (somehow increasing productivity whilst putting people out of work). Still others go on about how science will save us all, “peak oil is not dead; it’s merely peak cheap oil” or thorium reactors. And the mainstream says “markets will go up forever” based on cheap credit, a rising USD and “cash coming off the sidelines”…
It sounds sooooo…1999.
The ‘big picture’ is getting lost here. It’s the shrinking buying power of currencies in an age of rampant monetary inflation. And it’s very deflationary – at first.
Correct. First, slowly some “deflation” sets in ( based on rigged CPI numbers, job creation stats, GNP stats and other SOB ) followed by a swift sledgehammer inflation. Politicians ( in the past, “the church” ) keep(s) us stupid, banks ( before, the kings/robber barons of of the time ) keep us poor, the juridic system ( before, the inquisition ) keeps us powerless. Time for plan “B”.
“Politicians ( in the past, ‘the church’ ) keep(s) us stupid”
No one “keeps us stupid.” Everything one needs to know to self-educate oneself is now easily available on the Internet via Google searches. Except for those with low IQs, the “stupidity” is willful and there is no excuse for it. People can blame no one but themselves.
The MSM keeps people stupid.
Well.. not stupid… rather… ignorant. And misinformed.
Mark Twain — ‘If you don’t read the newspaper, you’re uninformed. If you read the newspaper, you’re mis-informed.’
Most people read the newspaper and believe every word of it. Because they are taught that from a very young age.
The constitution as written was meant for a moral and religious people. It will not work for any other type of society. Personal freedom comes with personal responsibility.
The phenomenon is known to historians and well known to numismatic students: it’s called “creeping debasement”.
Big bouts of conventional inflation/debasement are easy to trace: a typical example is the silver currency of the Ottoman Empire (akçe) which between 1585 and 1586 lost 44% of its silver content, leading to a classic case of price hyperinflation.
Creeping debasement is much subtler and was first described in the Byzantine gold coins (nomismata) of the late X and early XI century, which lost about 1% of their gold content per decade. It may not sound like much, until one remembers apart from a brief period of debasement during the 680’s the Byzantine nomisma had stayed stable at 97% gold content since the days of Diocletian.
Also one needs to remember Roman, Persian, Chinese etc mints were well able to to strike coins with a very consistent degree of purity down to 0.1% before the birth of Christ already. This was no mistake due to primitive technology.
It was just the Byzantine government taxing its citizens through other means.
What’s worse is that the biggest ‘non-store retailer’ is not making any money at it, except for pocket change recently, and they never have made money, though their shares are up 25-fold in the last 10 years.
Is there so much competition that nobody can make money (except of course by holding shares)?
As another (apocryphal?) story is told, a vendor says he loses money on every sale, but makes up for it in volume.
Amazon doesn’t always make big profits but at least you can see growth produced by investment in the business.
I think Amazon makes its profits by people signing up for Amazon prime
Petunia
Absolutely correct about AMZN profits & reinvesting in the business.
Bezos’ strategy (as controlling shareholder) has been spectacularly successful. At $365B in revenue and a PE of 190+, lots of investors have gotten rich (on paper) believing AMZN could easily switch to huge profits if Bezos so chose.
I’m in awe of Bezos’ business model and I certainly use AMZN, but I’m more than a little uncomfortable investing in a company that dependent on the genius of a single man (felt the same way about Apple).
Should be $120B in revenue and market cap of $365B
Sounds like Tesla
Not to worry — Amazon’s business model is to completely wipe out all bricks and mortar competition — then they will ramp up prices and be immensely profitable.
This is what investors are buying into…
The joke will be on them of course —- because of course wiping out the bricks and mortar will be like tossing a large bomb into the wheel works of the economy…
And the Amazon warehouses will be stuffed with product … with no buyers…. because there is no economy.
‘Free market capitalism’ at its best!
Or just a really bad joke….
“The joke will be on them of course —- because of course wiping out the bricks and mortar will be like tossing a large bomb into the wheel works of the economy…”
Good point, well made.
It is not just bricks and mortar retailers that Amazon is targeting but other on- line retailers too.
Also I don’t agree that Amazon is wanting to wipe out competition so it can ramp up its own prices – that doesn’t make sense. If there were no competition then Amazon prices could not be compared to anything. In any event, it doesn’t take much to compete with Amazon. Simply replicate what they are doing but price lower. That and identity their weaknesses.
I am not suggesting they are going to dramatically ramp up prices – and invite competition back in.
But there is no way they are going to operate off the current margins.
All Amazon would have to do once it establishes a monopoly on retail is charge what the competitors are charging now (and failing to compete) and that would deliver massive profits.
One can imagine if Amazon becomes the only retail player that it would be able to dictate prices of goods from suppliers… driving those to rock bottom (Walmart to some extent does this….)
That would also allow them to generate better margins.
Thomas Malthus
You need to take another look – the Dollar stores (taken as a category) are taking huge chunks of Walmart business.
Not all consumers will want this style retail, but enough do that Walmart is struggling to successfully compete.
You may think WalMart is a monopoly (and, realistically, they do have huge market power), but Dollar stores are finding it to be a huge target of opportunity.
To clarify … it is Amazon that is trying to establish the monopoly … at the expense of Walmart and all other bricks and mortar….
They are attempting to accomplish this by operating at virtually no margins… funded by punters who are buying into a future where there is only one major retailer remaining (Amazon) which will then raise prices and generate better margins.
Kinda of like a Walmart on steroids
RE: ..operating at virtually no margins…
Suggest this should be “virtually no *REPORTED* margins.
International trade promotes tax avoidance/evasion, much by “transfer pricing” How many billions are domiciled in tax havens?
I don’t think the goal is to make money right now — so rather than hide profits they would instead opt for the lowest possible price points….
The profits come after they destroy the businesses that cannot compete on price — and cannot offer the same dream of a single global retail giant down the road.
Plus, of course, ramping up prices will invite new competition, able to make higher margins! The whole monopoly thing is highly overrated, except if you’re the government and can legislate competition illegal.
Please let us know how much AMZN stock you have shorted…
Out west they are still building brand new huge outdoor malls with giant movie theaters, fast-fashion retailers, and upscale restaurant chains. They seem to be doing very well. These are towns packed with millenials. I think we are just seeing a shift away from the kohls and Macy’s towards stores like uniqlo and h&m.
According to the data spread by the industry, prime malls are still doing well with high occupancy rates and high rents.
But at the bottom, malls have started to unravel. That’s where the losses are. It will gradually work itself up, over the years. Older malls in so-so areas are dead. Bondholders/CMBS holders backing these malls have already started to lick their wounds.
But the word in the industry is that prime malls will ALWAYS do well…
In Darien, CT ( a prime area) the mall is doing well. But the goods and services being sold are all basic- food, food services. Trader Joe’s is packed ( high turnover, good quality, good pricing) but again no frills in the food. Selection is kept down.
I don’t see frills in the goods being sold. Food seems to be the dominant product offered. Of course, eating is primary, but still.
Is this type of selection even in a high end town, a leading indicator
of declining purchasing power?
I don’t know.
McDonald’s is hurting badly …. obesity rates continue to rise so this is not an issue of people shifting to healthy options
I don’t patronize fast food joints but I imagine a meal for a family of 4 runs $40+
There are a lot of families that cannot afford a $40 meal.
They are no doubt getting there fix of garbage from the grocery store — plenty of unhealthy options there — for under 5 bucks.
So the grocery shops are likely busier than ever.
“A grisly thought for brick-and-mortar retailers: on average, each individual consumer might already be buying less there than they used to”.
I can’t understand how anyone could be surprised by that, seeing that each individual consumer has less and less money to spend with every passing year. The banks get so much, the government gets so much, insurers get so much, and debt repayment chews up most of what’s left. People’s top priorities are eating, keeping their jobs, transport, clothing and a place to live.
Not only are all the Boomers saturated with “stuff,” but the younger generations get to buy the extra at garage sales. Most people are down-sizing now. I just got a bedroom set, office set and dining set for free from a friend who downsized. YAY!
This will continue as Boomers slide into old age. Even the Airbnb phenomenon will change. It’s only a device to pay for mortgages, not the warm, fuzzy sharing community idea marketed. Americans are so spoiled that they are often poor guests to host.
As of 6/10/2015 Amazon collected sales taxes in 3/4 of the states representation 277 million people or %77 of the population..It is ridiculous that AMAZON still avoids paying sales taxes in 12 states and was even more ridiculous that AMZN avoided paying sales taxes in the other states for years.
If it weren’t for Walmart’s efforts in California and other big states, Amazon wouldn’t be collecting sales taxes anywhere!
r cohn
A quibble: 4 of the 12 states you complain about don’t have sales tax (maybe 5, depending on how you classify Alaska).
Just for the record: without a tax nexus in a given state, AMZN had no legal obligation (until laws began to change) to collect sales tax. However, citizens in those states had a legal obligation to self-report receipt of sales tax-free goods and pay the state sales tax.
If you’re going to castigate AMZN (who was behaving legally), what’s your comment about customer behavior?
“legal obligation to self-report receipt of sales tax-free goods and pay the state sales tax”
You have got to be kidding, would you actually do that? Legal does NOT define right and wrong! If a law is pointless, irrational, and unenforcible, then as far as I am concerned that law is a dead letter. I do not bare my throat to the snarling fangs of a bureaucrat unless I have to. They can send me a bill if they want me to pay.
JerryBear
We are’t talking “right & wrong” (why would you think I’d accept your interpretation any more than you accept mine?) – we’re talking about what a government defines as legal. If you don’t like the law, get it changed. Courts enforce laws, not a single individual’s emotions about “right & wrong”.
I find it philosophically inconsistent (i.e. hypocritical) to rant about AMZN doing something perfectly legal while refusing to hold others to the same standard.
I posted this comment specifically because I doubted most readers knew AMZN behavior was perfectly legal. I wanted to see the the caliber of the responses & rationalizations (yours rated quite high).
it is the wholesaling of retail eventually it will lead to the collapse of brick and mortar then an online monopoly ie googl apple facebook and amazon .
after this they can raise the prices as there will be no competitors welcome to monopoly capitalism
No capitalism at all, much less monopoly capitalism.
Nah, we all live like debt slaves. But, hey, make different choices.
Green Rock
Individuals get to make choices. Some people willingly choose to go out and get into debt that has little or no on-going value (student debt for a low-quality degree & a great college lifestyle at Football U for 4 years).
Some of this is ok – it’s called discretionary spending. However, some people willingly chose to get into debt without intending to meet their promise to pay it back (I’m excluding abject poor from this discussion – that’s a different issue).
I’ll agree it’s personally more pleasurable to use financial resources to operate an iPhone or visit London than to pay off student loans. Lots of people freely chose to not meet that obligation and then complain they are debt slaves.
Gosh, too bad; it’s going to get a lot harder to borrow money…
Prior to bankruptcy reform act in US about 2004. Lenders had an equal responsibility to qualify loans on ability to pay. And if loan failed, only had 7yrs to collect deficienies.–Credit cars were wiped clean no questions asked. Now lenders have 14yrs to collect, credit cards are protected. Student loans taken over by gov’t now. You can’t bankrupt that you own it forever. So the youngest, most vulnerable are subject to public schools telling then that they MUST go to college or never succeed. So you make a loan decision at a young age. And you ARE a debt slave.
Its not just price. Brick and mortar stores are cutting back on checkers creating long lines. Their self checking kiosks are inefficient and often times faulty. As well the help is sometimes not friendly making for a negative experience.
That means ordering on line saves time and money.
I agree with Wolf that there will always be Malls and physical stores. There is a social and tangible component to shopping in person where you can feel and touch the merchandise.
As he is indicated in other articles there is an excess capacity in retail. That is going to change. Stores in strategic positions and adjacent to well populated centers will be fine.
I think what also needs to change is the experience. These stores need to be price sensitive and customer friendly. I am willing to pay somewhat more for a hands on experience. I am not willing to pay grossly more and be expected to endure lone lines and rude help.
I see the market adjusting to the new online ‘threat’, i.e. restaurants, coffee shops, hairdressers, car dealers, bars etc. will all gradually replace the ‘item’ and ‘gadget’ stores as their market moves online.
The odd clothes shops will also survive, but low budget ones like Primark as the middle class has consistently less money to spend each year on clothes, as more is diverted to taxes for the latest war/bailout/etc. and rental and travel costs.
Grahm
Interesting you think extra taxes go to the military and not to the middle class (military spending has dropped about $100B since 2010).
The biggest & fastest growing parts of federal government spending are:
1) Medicare/Medicade 25% ($938B) – AND GROWING
2) – Social security 24% ($888B) – AND GROWING
3) Defense & international obligations – 16% ($602B) – DECREASING
4) Safety net (food stamps, Obamacare – 10% ($362B) – AND GROWING
5) Interest on national debt – 6% ($223B) – AND GROWING
Chip, 1, 2, & 4 are growing because our population is growing and also because poverty is increasing. Do you really think this shocking? Do you have some kind of problem with it?
JerryBear
Well, yes, I do.
You view problems in terms of input (poverty increases – we need to spend more money); I view problems in terms of results (simply spending more money plainly has not reduced poverty).
(FYI: This general analysis also applies to education spending).
Adding the $362B safety net + $492B Medicade = $854B; dividing by 46M defined to be in poverty = $18.5k PER MAN, WOMAN & CHILD ($74,000 for a family of 4).
NOTE: $854B/yr is not all government spending on poor; this probably includes most Federal spending, and ignores state & Obamacare expenses.
Spending money that this does not address the underlying problems usually DIRECTS A LOT OF MONEY TO PEOPLE OTHER THAN INTENDED RECIPIENTS.
Beautiful speeches, bleeding hearts and spending more and more taxes taken from productive citizens obviously is not solving the problem AND IT SURE AS HELL IS NOT DELIVERING $74,000 OF BENEFITS TO POOR FAMILIES OF 4.
So, yea, I have a problem with that – so should you.
I went to a store in Omaha last month to buy a birthday gift. The jewelry was tin crap…I did manage to find a sterling silver pendant that fit the bill but I had to settle for a non-sterling silver chain to get the look I wanted. Fortunately the sales staff was top notch so I didn’t have a totally negative experience, but the choices were abysmal.
OMG!
As a Berkshire Hathaway stock owner, I implore you to go to Borsheims Fine Jewelry – you live in Omaha, you know where they are.
Please, please do not go another day buying tin jewelry.
’bout time!
bring it on, bring it on – hoo-wah!
“That non-store retailers have been kicking butt at the expense of brick-and-mortar retailers is by now well established.”
At least in Europe I think the huge cost increases for retail space for the small retailers are a major factor. I have heard the stories for over 15 years now, how small retailers have to close up shop when the rental contracts are renewed (usually after 5 or 10 years) and their rent goes up with double or even triple digit percentage.
First it was the small mom-and-pop shops that were crushed, now it is the medium-size national retail chains with e.g. 50-100 outlets that go pop (usually after being bled dry for a few years by some US private equity firm). I’m sure many of the small shops would still be in business if cost of retail space hadn’t multiplied 5000-1000% over the last generation.
The result is exactly the same stores in every city, from the big multinational companies that thrive on free money from the stock exchange or the ECB. My city is supposed to have one of the most diverse retail landscapes in the country, but even here you see the same crap everywhere that you see in every other European (or maybe even US) city.
correction: multiplied 500-1000%
RE: At least in Europe I think the huge cost increases for retail space for the small retailers are a major factor. I have heard the stories for over 15 years now, how small retailers have to close up shop when the rental contracts are renewed (usually after 5 or 10 years) and their rent goes up with double or even triple digit percentage.
—–
Yet another argument for the “socialist” solution of the establishment of low rise mixed use buildings with small Mom and Pop retail stores on the ground level and reasonably priced apartments on the next two floors. This is traditional construction in many areas of the world including the older U. S. cities. We must decide if the cities are to be elitist perfumed gardens and ivory towers (with masses of plebes to maintain), or a good place to live and work for the 99%.
nhz
It’s not those big bad stores that are killing small mom-and-pop shops – IT”S THE BUYING DECISIONS OF 350,000,000 USA CONSUMERS, most of whom simply are not willing to pay high prices.
Chip, have you heard about the old fable of The 6 Blind Men and the Elephant. Each thought an elephant was an entirely different thing because they only felt one part of the elephant. You are correct to some extant in what you say but it is only one factor and far from the decisive one. You need to see the whole picture and not just one part. Even with regard to your observation, it is not price alone which motivates consumers to buy but value for the money they pay. Even if fairly poor, most consumers would rather pay more for good quality than buy absolute crap for the cheapest price.
JerryBear
Nice fable, but I fail to see the relevance to my comments. Every retailer knows “price” includes financial price, convenience, service, inventory availability, location (…need I really go on?).
All I said was 350,000,000 Americans are choosing to spend elsewhere, blind mice and elephants not withstanding.
Your argument is with 349,999,999 of them, not me (I never told anybody to stop shopping).
as an increasingly rare, middle-aged (49 yo) artist left in the mission of san francisco, my roommate/best friend and i are wondering where everyone went. all the artists.
the city, as well as our neighborhood, are overrun with young and middle aged tech/ancillary-to-tech people who never look up and around at where they are. they are always bent over in their phones, never in real life or where they are.
regular shops where you get things you actually NEED are closing down for bougie clothing shops or restaurants.
i’m loving this site because the local news sites are too myopic and spitting rage. i need to understand the numbers more because these trends toward everything being killed is totally confusing me and i’ve been here as an artist too long and had no idea what regular people thought like or what they wanted. what they want is killing everything now. i get it.
but as an artist, i need to understand the status quo so i can find my place in it. many don’t and cannot. you’d be astounded at the numbers of employed secretly homeless living in their cars or shelters. the city now has no qualms about throwing up police parade barricades up and down blocks of sidewalks just to keep the homeless off. it’s surreal.
i used to be an author but publishing’s also dead now that the internet has made art, music, writing, and everything free content as a loss-leader that never wins anything anymore.
but i also am seeing a tiny market growing in making CUSTOM clothing of quality since the made-in-china numbers have made clothing the same, in the same three colors, with inconsistent sizing.
as an artist it’s ingrained in me to try and do things the opposite, “wrong” way. go against the tide so that i may shine in my little odd place. now that artists are gentrified and separated from each other and the internet claims to have all the information out there (another big lie as the algorithms only pull up what’s popular and with the click-bait idiocracy model of search engines, you get what’s known already over and over again in only 140 characters), i’m trying to find a way to rebel.
it seems locked up in america as cheap rent is the best way to stay free enough to say “fxck you!” / the other way of making a lot of fxck you money only makes you able to say it when you’re too old, docile, and well-trained to be any danger.
so i’m hoping to be a part of a growing OFF-LINE economy where you sell locally. somehow. i don’t know what will spring up, but rents are local and only affordable to restaurants and boutiques and the zoning isn’t for even small manufacturing anymore. only wealthy wanna-be artists (often tech people with money and an old dream from 1996 that has no customers in 2016) can afford fantasy galleries and restaurant attempts.
i don’t understand the airbnb takeover around, here, either. we’ve seen so many long time tenants getting evicted for temp tech workers or tourists visiting, looking over our city’s remains.
any artists left are servants to high tech, doing their shopping, petting their neglected cats walking their neglected dogs, and driving these folks around in uber.
it’s a city of slaves hanging on. spending the obligatory $3 to make $1.
and they’re only building high end condos for single people and couples???
us broke folk are already living stacked up in tiny places like cords of wood, but i don’t see where this is all going once wealthy folks want a little extra space to have a kid or two.
especially when their nannies won’t be able to afford to truck into the city after awhile. right now as they’re taking over the mission, they’re employing their nannies from next door for now. but you have go hours far out to be able to afford it here.
i’m looking/hoping/praying for the underground black market economies, as living above ground is like having a target on your forehead in california.
but as an artist, i’ve had to be online with my work and i still must flirt with it now, but my idea of success now will be to make custom casual/workout clothes for people who actually LOOK UP and AROUND at where they are in the world, and only need and want a few things that fit well, wash well, and are mixable.
i want to keep my needs small so that i also don’t have to whore myself out and can make clothes by finding customers only through word-of-mouth. and i can pick and choose my clients by who GETS what this is about as i would stab any rich self-entitled rich person with my scissors.
this city is now infested with such people. i want to be among the new growing trend (?) of artists who’re only accessible by old fashioned means of talking and compliments and card-passing. not just perusing, clicking and buying.
i’m slo horrified at the declining quality of all mass-manufactured clothing at the race to the bottom. nothing is worth full price and people are trained to look for the percentage off. that’s why amazon wants to quit the list price habit it helped start. and retail along with the newer/older amazon/walmart model is just american thinking with short term “quarterly” parasitic thinking that kills its host.
i hope that since we’re not a country to take to the streets and rebel, that we at least rebel in how we choose to live, eat, and dress. alice waters did real well with salad. it’s politics and a way of life.
also… libraries still reign supreme as the only place where real information is. the internet has become a joke.
but i love this site. the internet is still good for things like this. for calling out the bullshit everyone’s getting used to slinging.
i’m hanging around this site reading about the condo glut as if it were free internet porn. thank you! i know some say be careful what you wish you when we want it to crash… but the good times really are killing us and all that was amazing about this town.
where are the freaks? where have they all gone? they are dispersed like katrina victims…but they are not dead even though they are currently enslaved and driving miss daisy around.
something’s gotta pop. don’t kid yourself. because it’ll be too late if you do.
x
kitten in the mission of a dying san francisco
great post most of the rebels have left the building and all have left calif. i was born and raised on the ocean in southern california had to leave in the 90’s they destroyed the place nothing left to enjoy the beach is open from 6 am to 11 pm it is against the law to drink a beer smoke a cigarette throw a frisbee and there is a speed limit on the bike path with a policeman to give tickets of course kind of took the fun out of going to the beach
mikeltap: “i was born and raised on the ocean in southern california had to leave in the 90’s they destroyed the place nothing left to enjoy the beach is open from 6 am to 11 pm it is against the law to drink a beer smoke a cigarette throw a frisbee and there is a speed limit on the bike path with a policeman to give tickets of course kind of took the fun out of going to the beach”
YES! YES! YES! i’m astounded at the heavy-handed crackdown on LIFE everywhere. it’s so far beyond the ubiquitous nanny state type helmet laws around everything, everyone. everything’s against the law now, and i scared the now-illegal naked guy in the castro one morning when i happened upon him crossing the street with a sock over his penis, i CHEERED FOR HIM, for his defiance at being outlawed by scott weiner (you can’t make this stuff up!). i was screaming with joy and so happy, i nearly crashed into the car in front of me for all the pure exhiliaration i felt at his existence. his defiance–his unapologetic penis– seems totally anachronistic in the midst of all these scared, uptight, nervous flabby or emaciated pale safely androgynous unthreatening people hunched over in the sunlight of market street.
living in san francisco and the bay area makes sci fi seem like a cute appetizer for our current reality that is creepy. and yes… california now… speed limits on bike paths and getting TICKETS under the threat of law and ending up with warrants for your arrest if you went too fast. really??? you can get tickets for anything now and they don’t even have to be legally written, which they aren’t even with the parking authority.
it’s a constant state of harassment. yes. you’re so RIGHT. and no beer, frisbees, dogs on leashes… nowadays if you’re just actually looking up you’re considered dangerously not normal.
someone in a local comments section said the pokemon go generation were flabby little creepy people creating the new american constant surveillance/pan opticon with these phones as location devices. i would’ve thought that was over-the-top paranoid just a few years ago.
anyhow, mikeltap… like i told my best friend (guy) who hasn’t had a decent love affair since he married (and later divorced) his high school sweetheart/love of his life: with all the tindering hook up crap that’s made everyone into broken down shallow twitchy hustlers and hookers of damn near everyone now, be ever-so-grateful that you got to experience the sweaty chilly tickly thrill of holding HANDS and staring into eyes and WAITING and getting front-loading-washing machine STOMACHE ACHES that make you jittery and unable to walk.
politics is personal. it’s all related to cops giving BICYCLISTS tickets off road. you can’t kiss with abandon in a car if you’re wondering if you’re gonna end up on the sexual offender registry for grinding in public (i remember reading about one of the small beach towns on the coast giving a grinding couple jail time for grinding “simulating sex” in public around children. they wanted to make an example of that kind of behavior once and for all. and they ended up doing TIME here!)
good luck with holding on.
Retail – RIP (at least big chunks of it).
Above comments ascribe current sad retail fortunes to:
o Boomers being less greedy
o Monopoly AMZN
o Monopoly WalMart
o Various “socialist solutions”
o European rent increases
o Debt slaves
o Obama economy and screwing the middle class
o Mall death spiral tipping points
o Tin jewelry (AKA: crapification of product)
All good stuff, but I suspect they are effects – not causes.
The $4.9T/yr fuzzy thing called “USA retail” has been way overbuilt for probably the past 20-30 years. All the above factors are simply feasting on the decay caused by something that could not be sustained.
These are some stunning numbers:
o USA has 48 sq ft of retail space per person (1st in world)
o Britain has 24 (2nd most in world)
o India has 2
Macy’s helped develop what we know as modern retailing in the 1902-1930 period; that model bloomed like crazy after WW2 and probably peaked (in sustainability terms) in the 1980-1990 period (note: AMZN founded in 1994). What we’ve seen in the last 20-or-so years is the irrational exuberance of a dying business model (this is all millennial have ever seen). Quite frankly, there is a lot of dead & rotting retail meat out there.
This is not the end of the world, dinosaurs will not roam empty malls and we will not have to go naked because we can’t buy new stuff.
There is an ever-changing amount of money that people want to spend on “retail stuff”, and retailers need to adopti to that. They also need to adopt to consumer demand for new-and-improved delivery mechanisms.
Rowland Hussey Macy (founder of R H Macy’s) knew how to do this in 1858; Sam Walton and Jeff Bezos are simply Macy’s heirs.
interesting will somebody start selling condos in these empty malls please it will lead to there survival.
i am refferring to low price units perhaps storage sites car dealers colleges
lots of uses prime spaces