I’m in Awe of How Fast Brick-and-Mortar Retail is Melting Down

As so many times, Private Equity firms are in the thick of it.

Mall traffic is sagging. Department store sales have been in decline since 2001. Most retailers are loaded up with debt. Many have been losing money. Now they’re running out of options. Store closings numbered in the thousands last year. This year they promise to get much worse. “Zombie malls” have become reality, their vast parking lots rented to car dealers to store their excess vehicle inventory.

But ecommerce sales are booming, including online sales by some brick-and-mortar retailers, such as Walmart and Macy’s:

Over-indebted retailers are notoriously difficult to restructure and many end up being liquidated. Unsecured creditors, such as suppliers and junior bond holders, are often left out in the cold. Even secured creditors can end up holding the bag.

April so far is huge for brick-and-mortar meltdown:

April 21 – Bebe Stores, a fashion retailer, announced, after four years of losses, that it would close all its 180 stores by the end of May and liquidate all merchandise and fixtures in the stores. It might also file for bankruptcy to get out of the store leases. It will only sell online.

Barely a month earlier, Bebe said it had hired a financial adviser to look at “strategic alternatives” and a real estate adviser “to assist with options related to its lease holdings,” at which point its shares plunged.

April 19 – Neiman Marcus, the luxury retailer with 42 stores around the country and two Bergdorf Goodman stores in Manhattan, announced that, in order to preserve cash, it would not pay interest on a bond issue in cash, but “in kind.” The payment-in-kind (PIK) option had been written into the bond covenant. At the time, creditors didn’t care. Now they’ll get the coupon on these $600 million in 8.75% notes for the next six months in form of more bonds of uncertain value. The already beaten-down notes traded at 56.7 cents on the dollar.

On March 3, sources told Reuters that Neiman Marcus has hired investment bank Lazard Ltd to help restructuring its nearly $5 billion in debt though it was, these sources insisted, in no immediate risk of bankruptcy.

The company was acquired by private equity firms in a leveraged buyout before the Financial Crisis and is now owned by Ares Management and the Canada Pension Plan Investment Board. They were going to dump it into the public’s lap, but the IPO was scrapped when the problems could no longer be hidden.

April 17 – Marsh Supermarkets was preparing to file for Bankruptcy, sources told the Wall Street Journal. Three weeks earlier, it stopped paying rent on six Indianapolis stores. Here too, there’s a private equity angle. Sun Capital Partners acquired Marsh in 2006 for $88 million in cash and the assumption of $237 million in debt. At the time it had 120 stores. Ten years of asset stripping later, the chain is down to 67 stores and going bankrupt.

April 11 – Arhaus, a furniture retailer that designs its own furniture and contracts out manufacturing, with 67 stores in 25 states, has appointed a “chief restructuring officer, two sources close to the situation said,” according to Debtwire. “This complements the co-advisory roles of Piper Jaffray and Candlewood Partners to explore a refinancing.”

In early March, Arhaus announced that CEO Adrian Mitchell, after just 13 months on the job, would be replaced by co-founder and Chairman John Reed. In 2014, private equity firm Freeman Spogli made a minority investment.

April 4 – Rue21, a teen apparel chain with over 1,000 stores, missed principal and interest payments on its debt and is preparing to file for bankruptcy as soon as this month, said “people familiar with the matter,” according to Debtwire.

Once again, there is a private equity angle: the company was acquired by PE firm Apax in 2013 for about $1 billion. Back in September 2013, problems were already piling up when JPMorgan, Bank of America, and Goldman Sachs had trouble selling the junk debt they pledged to sell to fund the buyout.

April 4 – Payless Inc., the discount shoe retailer with almost 22,000 employees and over 4,000 stores in 30 countries, filed for Chapter 11 bankruptcy. It plans to slash its debt in half. It said its restructuring plan has the support of creditors holding two-thirds of its first-lien and second-lien term debt. It said it would immediately shutter about 400 stores in the US and Puerto Rico. CEO W. Paul Jones blamed “the continued challenges of the retail environment, which will only intensify.”

Here too, a PE angle: Payless was acquired by PE firms Golden Gate Capital and Blum Capital Partners in 2012 when publicly traded Collective Brands was broken up.

And this is the March meltdown:

On March 20, Sears, the big whale that everyone is waiting for to wash up on the beach, came closer to washing up on the beach by acknowledging that it will likely wash up on the beach, when it said in its annual report that it had “substantial doubt” about its ability to keep operating as a “going concern.” It lost over $10 billion in recent years.

When will Sears finally file for bankruptcy? Not before the second half of 2017. That was our verdict in December, and we’re sticking to it. If it files before July 8, 2017, it might run afoul of the bankruptcy code’s two-year look-back period governing “fraudulent conveyance,” concerning what happened to Sears’ real estate.

On March 11, Gordmans Stores, a department store chain with over 100 locations in 22 states, filed for Chapter 11 bankruptcy with plans to liquidate its inventory and assets. By the end of March, Stage Stores jumped in and offered to buy at least 50 of the stores.

Gordman’s is another PE firm asset-stripping special. It was acquired by PE firm Sun Capital in 2008 at the end of the leveraged buyout boom for an undisclosed price. In 2010, Sun Capital sold 30% of this shares in an IPO. Gordman’s got nothing. In 2012, Sun Capital sold more shares, slashing its ownership to 50%. In 2013, Sun Capital forced Gordman’s to issue a $70 million special dividend, of which Sun Capital got half. Of that dividend, $25 million came from cash holdings; $45 million was borrowed money. In total, Sun Capital obtained $140 million, likely exceeding the purchase price by good margin. And the party may not be over yet.

On March 10, Gander Mountain, after a failed expansion drive, filed for Chapter 11 bankruptcy. It will shutter 32 of its 160 stores. It had been taken private in 2010 by Gratco, a holding company controlled by Gander Chairman and CEO David Pratt, and Holiday Station stores, a gas-station retail operation.

On March 8, RadioShack, owned since 2015 by General Wireless, filed for bankruptcy for the second time. It will close about 200 stores and evaluate options on the remaining 1,300.

On March 6, hhgregg, an appliance and electronics retailer, filed for bankruptcy, after announcing a few days earlier that it would close 88 of its 220 stores, shutter three distribution centers, and shed 1,500 jobs.

On March 1: BCBG Max Azria filed for bankruptcy. The fashion retailer that once had more than 570 boutiques globally, including 175 in the US, started closing 120 of its stores in January.

The January and February meltdown:

  • Michigan Sporting Goods Distributors said it will liquidate its 68 stores and lay off its 1,300 workers.
  • Eastern Outfitters, the parent of Bob’s Stores and Eastern Mountain Sports, owned by PE firm Versa Capital, filed for bankruptcy.
  • Wet Seal filed for the second time in recent years. The teen retailer closed all its stores.
  • Limited stores, another victory for PE firm Sun Capital, shuttered all its 250 stores.
  • American Apparel, a manufacturer with 110 retail stores, which had filed for bankruptcy for the second time last November, said that it had started to lay off 2,400 workers and that everything would be shut down. Only the brand name was acquired by a Canadian firm.

This thermometer for discretionary spending is the first to react when consumers hit their limits. Read…  Restaurants in Worst Tailspin since 2009/2010

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  180 comments for “I’m in Awe of How Fast Brick-and-Mortar Retail is Melting Down

  1. hidflect says:

    Pico, a Japanese housewife, started making cat bags which became a huge hit. A very select department store (Daimaru from memory..) offered her the amazing opportunity to sell her products via their stores. She turned them down, saying she preferred the personal contact with her customers via emails and her website. When I read that a year ago, I really thought, “The golden days of retail stores are finished for good..”

    See the cat bags here:

    • yep says:

      they are closing because trump won the election, if clinton won they would not close their stores…..it’s the trap for donald….period

      • MarkinSF says:

        Definitely. It’s a worldwide conspiracy and everyone’s in on it except you.

    • alex in san jose says:

      Those bags are …. creeeeepy.

  2. Jonathan says:

    Online-proof products are the exception than the norm, and I bet a ton more people finds customer service with Amazon much better than the average retailer, let alone prices.

    • cdr says:

      Online plus the big box home stores plus Walmart are my main stops. Plus Marshalls and the similar stores. Marshalls rules for lots of things.

      But Amazon is great for bits and whatnots. And Ebay. Last Xmas, Amazon sold some Dockers and GBX shoes for pennies on the $. I needed some dress shoes. For about $150, I got 4 pairs of dress shoes, 1 pair suede high top casual shoes, a pair of leather chukkas and a pair of casual leather loafers. After XMAS they went back to regular price. Amazon sales, too … not the pop up fake sellers that have littered Amazon as of late. Made my Xmas. Retail would never have this.

      • Spring Rabbit says:

        Retail has RENT. This whole trend is a squeeze. Amazon is just like Walmart, when the competition is gone, prices go up. We’ll have fewer choices, free shipping will be gone & no local businesses. We deserve what we get. It’s really sad that Americans need to squeeze an El Salvador mother to save $5 on jeans, when they have 10 pairs. I’m not sorry for the US anymore.

      • Cashboy says:

        Amazon is a great big shark in a tank eating everything smaller.
        I had a client that was buying tablets in from China and selling on Amazon.
        He told me that Amazon asked him for his bank statements and purchase invoices on the basis of “concerned he would not be able to fullfill the orders and viable business”. threee months later they were selling his product themselves. Amazon have bigger buying power and already had his 10% commission as a starting margin.
        In effect, Amazon use their sellers for market research.
        Expect that to continue and either be a returns clerk (already robotising the picking) or a self employed delivery driver for them.

    • Anon says:

      Unless you are a Prime customer, Amazon treats you shabbily. Orders can take 5 days just to get processed before they are actually shipped out. Some products online are not available to non-Prime customers. Amazon may be sowing the seeds of its own future decline.

      • cdr says:

        I am a prime customer, but I never sign in until after I make my selections and am ready to buy. My browser cookies are cleared daily, several times automatically the way I’m configured. They don’t know who I am. Those deals were available to anyone. Amazon Prime gives me free shipping for lots of small purchases. Overall, I come out ahead. I assume the ones who buy prime and don’t order much are paying for me.

      • Frederick says:

        Not really My wife used them a few times and was very happy with them

      • alex in san jose says:

        Anon I’ve been a non-Prime customer and it’s been OK. I choose free shipping whenever possible and I got one (thin covers) book kind of beat-up, everything else has been OK. So it takes 7-10 days to get to me, I don’t mind.

  3. Chris says:

    Two factors – one evolutionary, one systemic. The natural evolution away from brick and mortar retail was made inevitable by the growth of e-commerce. The days of Sears and other retailers is numbered. The systemic issue is more troubling. The economy of the US is largely smoke and mirrors. Unsustainable debt was the “key” to our recovery. In reality, this debt boom did a poor job of goosing the economy and has all but guaranteed that the next crash will be worse than the last. There is a day of reckoning and when it comes it will be very bad.

  4. James says:

    The only reason I go to the mall is planet fitness and the free pizza. For 99 bucks a year you get more value just eating the pizza alone. And they have free bagels and gourmet coffee. What kind of business model is that lol.

    • Frederick says:

      99 bucks a year WHat I thought at first you wrote 99 bucks a month and I thought that was alittle high They will probably be next

    • Mary says:

      You go to a gym that hands out free pizza and bagels? Sounds a little self-defeating, but what a business idea. You sweat off the calories for an hour, then consume a plateful of free carbs that put you right back to step one.

      • kitten lopez says:

        (i was thinking the SAME thing!!! eeek gads)

      • James says:

        The best part is at around 7pm they will give you a whole pie just to get rid of the pizza. They do pizza night once a month so you better be there early for the best slices lol.

  5. Kent says:

    I’d love to know who was left holding the bag on all of that PE generated debt. I’m guessing a lot of pension funds for what used to be the American middle-class.

    • JB says:

      it seems that these PE firms have little ” skin in the game” . Wolf can you explain how these entities are structured, their funding source, and how gains/losses are distributed. Also i believe that much of their income is taxed at a capital gains level as opposed to ordinary income via a tax loophole . More importantly who gets left holding the bag when one of these ventures goes

    • Mike G says:

      I wonder how much of the bankruptcies can be attributed to challenging market conditions, versus private equity overloading the companies with debt while strip-mining them for fat management fees.

  6. Jack says:

    I am an antique. I NEVER go to malls, have always wanted to touch and ” feel” the merchandise. I like to try on what to wear first. I really enjoy going to mom and pop stores with the owner near by.
    I guess those days are truly over. Went to buy some grandchildren toys at a lovely privately owned store. Owner said he is closing up shop. Still has a wonderful clientele but the rent holder keeps upping the rent. She’s tired of working for the landlord. Landlord told her a national chain would want the space and pay top dollar for rent– probably not a toy store. Sad. This is the future of retail.
    When a question is asked the answer is ALWAYS about the money.

    • MC says:

      Having a “national chain” lined up to “pay top dollar for rent” is one of the oldest tricks in the book to increase rent without having to provide any further justifications, especially in environment which is literally drowning in vacant retail space.

      We all know about the dying malls in Flyover Country, but what about the ultra-prime shopping streets in New York now sporting double digit vacancies?
      On one side I can sympathize with landlords: municipalities give airlines a run for their money when it comes at squeezing blood from customers while offering an inferior service. If Bram Stoker wrote Dracula today he’d made him an airline CEO or a mayor from a Flyover town instead of an undead Carpathian aristocrat.
      But on the other money always talks. If we have a glut in commercial real estate rents have to come down, at least until supply normalizes. If vacancies in an area have gone from 10 to 16% you cannot ask for a 20% increase in rent.

      But as several acquaintances of mine have remarked, most people still have to understand 2006 is over and with it the party.

    • 2banana says:

      “Still has a wonderful clientele but the rent holder keeps upping the rent.”

      I have read and heard many similar stories.

      It does seem illogical.

      A massive glut of commercial vacancies across the nation and yet landlords keep massively raising rents on the few shop keepers they have left…

      Makes no sense – something has got to give.

      Vacancies KILL landlords, After a few moths, you will never make up the lost revenue even if you do find a higher paying tenant. And a few months of a vacant storefront leads to other vacancies and people staying away from your dying location. Vacancies = death.

      • Suzie Alcatrez says:

        Some of these retailers had 20 year leases. Who knows what they negotiated back in 1997.

      • Ken says:

        >yet landlords keep massively raising rents on the few shop keepers they have left…

        >Makes no sense – something has got to give.

        As an operator of bricks and mortar locations for over thirty years, I could not understand why some strip mall owners will demand top dollar for an empty strip mall (which of course they wouldn’t get.)

        The primary explanation I could come up with is that to service the debt the owner must get X dollars per sq ft or project a loss.

        Of course, the secondary explanation is that is owner of the property has unrealistic expectations.

        Whatever the cause, I still see this in my neck of the woods frequently

        • Spring Rabbit says:

          Could it be that the “mall owners” are REITs that do better losing money…? It’s all smoke and mirrors. They’ll wipe out American retail and people will be forced into digital, online, Walmart purchases. Like it or not. There’s no real economy. But the lost jobs are a major part of this scam. I like to buy local.

    • Frederick says:

      Yeah exactly What’s up with the greedy landlords Karma will most likely get to them eventually when they bankrupt everyone

    • OutLookingIn says:

      Jack, I can sympathize since I too am an antique.
      The only shopping I do these days is at second hand stores, community thrift stores or garage sales.
      You can usually find exactly what you want, with the added benefits of it being great quality and already broken in! The cherry on top? Cheap.

      • Jack says:

        No. The cherry on top is no taxes!

      • alex in san jose says:

        Outlookingin – I’m a born and bred thrift shopper but … I’ve become very skeptical of thrift stores and garage sales and so on.

        Garages sales to me, are not worth it. Too much area to cover on my bike, and when I had a car I estimated the savings, at best, would compensate for the fender-benders you’d get from horrible drivers zooming in and out of the sale.

        Thrift store clothes, I estimate, are already about 80% worn out. You’re paying 20% of new because you’re only getting 20% of the service life. Because you’re only getting 20% of the service, life, you’re constantly shopping in thrift stores for clothes. I have a favorite Airwalk shirt that I got new at Ross for about $8, and I’m wearing it out myself. When I’m done with it, it will well and truly be used up. So: 1 shirt, one service life of about 3 years. Or, 1 shirt, having to shop 2X a year for 3 years and it’s never the same shirt.

        Garage sales can be good for bowls and pans and stuff …. except with the possible exception of Revere Ware and old borosilicate Pyrex, you’re just getting used-up examples of the same stuff in the stores, for maybe a 30% markdown. Hell, I was looking at a very nice kitchen knife in Ross tonight, major brand (can’t remember now but “quality” brand) and almost bought it, it was $3.

        I have come around to considering “thrifting” and “garage sale’ing” to be hobbies that can provide you with some short-term clothes and so on, but the time spent bargain-hunting and bargain-hunting again after you’ve used up that final 20% of use-life in the goods, to be not worth it unless you have tons of time and almost no money.

        It’s like fishing for dinner or just doing what you’re good at and buying fish in the store. Even in Hawaii where i grew up and got fairly good at fishing, it only made sense when I was growing up living a 3rd world lifestyle.

        • d says:

          Thrift stores only work, for thrifty shoppers.

          I brought a brand new Down filled waterproof 3/4 coat in our summer season. Still had the original price tag attached in the sleeve. I discovered when it got it home. Price on it $135.00 I paid $12.00 for it.

          I also brought a $600.00 item, less than half worn, for $ 40.00.

          As for your garage sale comments, defiantly.

    • chris Hauser says:

      and then three to five years later the national chain goes broke.

  7. Chris says:

    They need to evolve or die. They should convert their stores into online warehouses and have “fashion booths” for the people still wanting personal shopping experience. They could have customers in a booth where they can select item(s) they want to try on from a large touch screen and then the clerk goes into the warehouse and gets it for them. that way they can maximize the space usage.

  8. beadblonde says:

    There’s no money in customer service so it’s unreliable. In the big boxes count yourself lucky if you find somebody interested in customers or somebody who can speak or somebody who knows anything about what’s being sold. I can’t really complain that much because the poor souls don’t want the dead end low paying job anyway. Can we blame PE for automated telephone systems with their amazing distorted canned music?

  9. matt says:

    Marsh is closing 10 immediately. . When you take into account the amount of supermarkets this year alone that have closed from the big, small , neighborhood chains that have closed wolf that I have been keeping track of. throw in the dining and fast casual chains such as Bob Evans, Ruby Tuesday. Outback, and so many other steakhouses, mom and pop it is somewhere north of 12 to 15,000. heck the Dennys where I live just around the corner closed when I was on vacation!. High rent to make up for vacant stores and loans due from financial crisis. Housing. medical costs. student loan debt. autos. all sitting at record highs. Disposable income at record lows. Dining establishments just had record 6 records neg growth not seen since financial crash. add in Subway closed over 350 chain stores last year. Walmart has laid off almost 2,000 employees in the past 6 months alone. Deep down this is a sign of trouble. when you buy back your own stock and yet lay off thousands? I am expecting massive store closings with them by summer. Sears announced Friday they are closing 50 auto stores and 90 K mart Pharmacies. we now sit at the lowest amount of retailers since the mid 1990’s. seems very few know what is going on. On line has very little to do with this. It is much, MUCH deeper

    • Frederick says:

      Oh I know what’s going on alright ever since Ross Perot and his “sucking sound” My only amazement is how long they have kept the lights on in our country Sad but not unexpected Don’t expect it to get any better without a 50 percent or more dollar devaluation IMO

      • Mike G says:

        Back when I worked for them (and still, I’m sure) Perot Systems had a large outsourcing operation in India. He did plenty of sucking jobs out of the country himself.

  10. Paulo says:

    Our local Sears closed a couple of months ago. (northern Vancouver Island). Actually, I haven’t a clue exactly when it closed but I heard about the closing and filed it away under Wolf Street confirmations. :-) However, a new furniture store has just opened up which is based out of Victoria. The other three furniture stores already have empty lots. Literally. They Are Empty. Why a new one is opening up is beyond imagination?

    But I thought of Sears last week. 44 years ago I was an apprentice carpenter. Right out of high school I needed to fill my toolbox. I bought Craftsman tools from Sears, and they were pretty good quality in those days. I also bought a load of mechanic tools, sockets and wrenches. I needed tools and my first thought was Craftsman, in 1973. Anyway, I was in the throes of a big reno last week and needed a plumb bob. I looked for my trusty craftsman and could not find it. I felt sad, to be honest. (I had to replace it….boo hooo). I still have a level and an aluminum square from the first purchase, though.

    To make a long story short, on the same reno I burned out a sander. Yesterday, I decided to replace it. There are no tool stores left beyond Home Depot and Home Hardware in the nearby city. I hate those stores and their ill-informed staff. My first thought was to boot up the computer and go online. 2017. (My how things have changed). The funny thing is, I don’t even care if it costs a bit more, which it won’t. It will save me the hassle of the entire waste of time going to Home Depot. Besides, department stores usually have a lower end product line. It looks the same, but …….


    • Frederick says:

      The hired help in those mega stores are basically clueless with the exception of a couple older guys who actually have alittle knowledge You get what you pay for I guess

      • Jerry Bear says:

        Not to mention constant employee turnover. Welcome to the wonderful world of commodity labor!

    • alex in san jose says:

      Paulo – If you’re over a certain age, Sears was life. Craftsman tools, toughskin jeans, kitchen was full of Kenmore appliances if you were doing well, Sears-branded sports equipment in the yard, Ted Williams this and Ted Williams that… I had a Sears “Silvertone” guitar when I was a kid. The quality of Sears stuff was good, and if it was “Sears’ Best” with the little sparkle next to it in the catalog, it was really good stuff.

      It was a time of a very prosperous middle-class, professors made good money but plumbers made more, bus drivers, you name it, you could be an egghead or a gearhead, didn’t matter unless you were a total deadbeat you were going to live well, and actually even the deadbeats lived OK.

  11. Bill Tilles says:

    Hi Wolf,

    For me it helps to place this in a broader context of ongoing technological change–new technologies by definition almost always annihilate the old. Henry Ford prob. didn’t set out to destroy the horse and buggy industry. But he did, completely. Same with Steve Jobs and IBM or now Bezos and traditional retail merchants. The one benefit we as consumers have traditionally received is that these transitions are typically and sometimes profoundly deflationary.

    • Suzie Alcatrez says:

      Ford did a lot more than kill the buggy industry.

      NYC held conferences back in early 1900s to try and find out a solution to the horse manure issue.

      Those brownstones were built elevated to escape the rivers of manure that flowed down NYC streets after each rain. The stench was said to be overwhelming in the summer time.

      • MC says:

        In the XIX century both the French and the Chinese had already found how to get rid of all that manure: small commercial vegetable growers operating just outside the old wall lines were ready and willing to pay people to scoop it up so they could use it as fertilizer. Small, intensely cultivated lots needed all the manure they could get to feed the booming urban population in an age when the vast bulk of the food consumed in the cities was still grown locally.

        This is the basis of the modern “deep bed” method for potagers (vegetable gardens) in France, Britain and elsewhere.
        When John Seymour was invited to hold seminaries in the US in the 70’s he was amazed to learn that for all their ingenuity, not to mention large numbers of immigrants from both France and China, Americans did not know this method and hence wrote The Self-Sufficient Gardener to explain it to the broad public.

        • alex in san jose says:

          It wasn’t just *horse* poop, if you get what I mean …. done right, with modern knowledge of microbes etc., that can be done and it works great.

    • Beard681 says:

      LOL – There are supposedly more horses in the US now than in 1890 (yeah I have a hard time believing that too). So creating cheap transportation obviously opened up more markets for transportation and services than lost markets for buggies. The retail crash isn’t about online, it is about over building (by a very wide margin compared to other countries) of retail, an aging population, and a declining standard of living. Even with a growing population, sales overall (including online) are down. After all auto sales are also down – nothing to do with online technology.

  12. 2banana says:

    Brick-and-Mortar Retail needs to focus in their advantages over online retail purchases (like the Amazons of the world) or they will go bankrupt.

    1. You can have the merchandise now. But stores better have it in stock or I will just go home and order it online.

    2. Touch and feel what you are buying. How many times have you bought something on line that was not as you expected and you would NOT have bought it in the first place if you saw it first hand? Now you have to return it (see 4).

    3. A knowledge and helpful salesperson. You don’t get that online. Now add in building a relationship with someone that knows you and your needs.

    4. Return things easily with shipping and with no shipping costs. The worst part of online retail even if it is free to return. And for Amazon, changing your mind is NOT a valid excuse for free shipping for a return,.

    5. Bargaining. Negotiating. No way to do that online. But a part of the real world for many people.

    To summarize – if you are brick and mortar retail selling a commodity with limited stock and with unfriendly staff, you are in trouble.

    • Kent says:

      Yes. But paying for a quality selection and quality staff doesn’t “maximize shareholder value”. Especially when the shareholders are PE firms looking to strip and flip.

      • 2banana says:

        I agree.

        That is why (like how small to medium craft beer companies are destroying large beer companies) and I see small to medium retailers destroying their large national chain competitors.

    • beadblonde says:

      Actually you get customer experiences online and that has helped me make intelligent buys a number of times. Among all the lousy Amazon reviews there are often a few thoughtful ones.

    • Jerry Bear says:

      Your ideas are far too intelligent, too full of common sense, too practical to ever be implemented.

  13. Kent says:

    By the looks of the chart Wolf posted, total retail sales have gone from roughly $60 billion in 2000, to $140 billion today. I’m assuming those are nominal values. It would be interesting to see what they are adjusted for inflation and population growth. Nominally, those numbers do not seem to reflect an overall deterioration in sales.

  14. Willy2 says:

    – But the US has more all kind of malls than any other developed country. And with the help of on-line shopping that bubble is now blowing up.

  15. Bale says:

    I think the contention that ‘it’s all about online’ is off base.

    Why are restaurants and autos floundering if online is the issue? Online retail plays a role but the bottom line is the consumers have no excess income anymore.

    I talked to the manager at a local sporting goods store that has been around for decades. He said that besides the dropoff in foot traffic young people are not taking on hobbies that require them to spend money. A whole generation has adapted to their cell phone being their only source of entertainment.

    • kitten lopez says:

      i know… this is FASCINATING on SO MANY LEVELS that make my head spin…

    • mvojy says:

      Young people are gravitating to the cities and don’t need a car. Technology for cars seems to be advancing towards self-driving and self-parking cars with enhanced safety features like automatic braking. Consumers may be waiting on the sidelines since these features may become more common and come down in price. Uber has an effect since why pay for a car to sit in your driveway, plus insurance when you can occasionally call Uber for a lift instead. Restaurants all comes down to price for the older and always trying the new places only for the younger.

    • cdr says:

      YES, you nailed it. Retail is a symptom. The lack of disposable income is the problem. Why … school loans, rising productivity that decreases the need for high wage human employment, low paying jobs replacing those lost during the recession. Low rates of interest via QE also create this problem.

      Someone’s interest expense is my interest income. If my interest income were significant, I would spend it and so would others and the spending would be reflected in the economy.

      Low rates for borrowers allow investment that does not affect employment … paper flipping works just fine. Basically, central bank low rate policy helped create this problem. Higher rates will fix it, although the upper 1% and their flunkies will scream if they tried.

  16. Frederick says:

    Kent I’m not sure you are reading it accurately It says e commerce sales which is everything purchased online versus “Department store sales” Does Dept store sales include everything or just big retailers like Macy’s?

  17. cdr says:

    To early to say but perhaps a fast fall is the new order of things. Oil prices crashed. Gold prices crashed from $1800ish by 1/3. Now retail. Possibly more since I don’t follow many asset classes.

    Perhaps the ‘fast fall’ is the new normal. Things are rosy until they’re not then look out below until actual market value is reached.

    If this is the new normal, equities and bonds are on the list of pending price adjustments. Bonds are overvalued world wide due to central bank rate manipulations via QE and reinvestment of maturities. Equities are high due to easy money and HFT, plus a probable secret fix by central banks to ‘protect the financial markets’ every time something potentially volatile occurs (Trump win, French elections, possible war outbreaks).

    If bonds fell to market value, then stocks would also follow I assume. I would guess it’s only a question of timing. Tomorrow or 2025 or somewhere in between.

    • Frederick says:

      CD-R gold is a bad example as it was manipulated lower and still is in order to give the impression that fiat dollar denominated paper investments are safe They most certainly are NOT

      • cdr says:

        Respectfully, I don’t buy the gold conspiracies. Gold is a precious metal with a history. Beyond that, it’s a commodity that is affected by supply, demand, and manias. Gold salesmen are not economic seers. They’re salesmen. Logically, fiat makes a fine money. Gold sales folk like to scream bloody murder at comments like that since it would kill their sales if people knew that gold was just a yellow metal with jewelry and industrial uses. Conspiracy theories are good for business.

        • Bandini says:

          Gold possession is not a conspiracy, it has been in the past an indicator of lack of trust in fiat, just as it is now. It also has no non-manipulated price discovery, that is not conspiracy that is fact and many sites have information that show bank collusion (like Libor manipulation). I agree the Gold salesman over sell it and they will use any reason, it is their job, but much of their arguments have some resemblance of truth. No different than Real Estate agents pushing Florida condos…
          However holding fiat currency (or as Frederick suggest bad investments based on fiat) is why alternative commodities are what you should be holding…that’s either PMs, Real Estate, Businesses, Bitcoin (yes its technically a digital commodity), etc…

  18. TJ Martin says:

    … and yet in the midst of all the brick and mortar bankruptcies what is Amazon now pursuing ?

    Brick & Mortar Amazon stores . Go figure .

    So please … somebody convince me this present economy from stem to stern isn’t the very definition of the term .. Kafkaesque . Anybody ?

    Kafkaesque ;

    1) Marked by a senseless, disorienting, often menacing complexity.

    2) Marked by surreal distortion and often a sense of impending danger.

    3) In the manner of something written by Franz Kafka.

    • kitten lopez says:

      i KNOW! it boggles the mind to think of nonsensical ALL this is.

    • Wilbur58 says:

      Instead of Kafkaesque, you could just go with monopoly.

      Amazon doesn’t do anything new in terms of products. It sells books, clothes, household items, etc. It’s just a new conduit for that. And despite bleeding cash for ages, it still got to benefit for 14 years of “No sales tax!”

      They’ve exhibited anti-competitive behaviors just like Microsoft.

      We need a return to anti-trust laws and labor unions.

      We still have plenty of gains, but they go to so few that the rest have less and less. Eventually the sales get worse and worse. But with monopoly power, nothing changes.

    • polecat says:

      Financialized commerce on the brown acid ….

  19. economicminor says:

    Some things to ponder.

    About half of our workers don’t have any disposable income… They spend all their income on mandatory purchases. There are a lot of people who subside on SS, pensions and disability. Some who live in the black market of cash only. And these sectors of society are growing.

    The government allowed/helped the buyout of the retail sector by PE groups and pension funds… they looted the sector.

    The big banks helped fund the continued bidding up of commercial properties and selling the securities to the PE groups and pension funds In the ends raising the rents to pay for the new leverage.

    The big banks helped with the easy money for CRMBS that funded the continued expansion of brick and mortar which facilitated the demise of BnM retail with to much competition and the destroying of the small local enterprises.

    Thus all this debt drove up the costs both in rents and in overhead to the retail sector. All sides of retail were leveraged.. business debt and real estate debt. All while the incomes of the workers were flat or declined.

    So now we have a nation that has probably over half its citizens who are disenfranchised from the system because their jobs were sold off to foreign low wage entities or replaced by H1B visa holders. Tens of thousands of retail workers will soon have no incomes. And even if they did there will be nowhere to purchase the things they need because disenfranchised people often have no credit cards or Internet accounts.

    Is the USA turning into a 3rd world country right before our eyes? And all this was facilitated by government actions or inaction? Why? For what purpose? Or all all those in Congress just insane?

    • Frederick says:

      Yes, yes and most definitely yes Look at people like Schumer, MCCain and Pelosi

    • Kent says:

      I don’t believe anyone planned the world we have today. It is just the result of a lot of well-meaning government policy changes. The spectacular growth of the USA and its middle-class in the ’50’s and ’60’s was the result of policy decisions made in the 1930s to maximize employment and working class incomes, with the knowledge that this would drive a virtuous cycle of broad-based wealth creation.

      This came at the expense of the wealth and power of the very wealthiest segment of American society. They were able to convince the population that accepting policies that maximized their incomes would improve the country even more. They were wrong. Not so much because the idea was terrible, just how it was implemented.

      And the government is essentially Congress. The skill set of a Congressman is not devising policies that help average Americans, the skill set is simply to seem less stupid than the person he/she is running against.

      • economicminor says:

        “I don’t believe anyone planned the world we have today.”

        Those who fail to plan, Plan to fail!

        There is no such thing as “It is just the result of a lot of well-meaning government policy changes.” They may have been well meaning but for whom? Not the majority of citizens!

        Those who were suppose to be the defenders of the Constitution (Congress and the Courts), remember the Preamble “We the People, in order to form a perfect union”, gave an oath to a concept they either didn’t agree with or thought to themselves that “We” was just themselves and their major campaign contributors.. They gave no thought to How was this going to work out? Or they did and this was their plan. So they were/are either idiots or .

        • Kent says:

          I am a firm believer that people can deceive themselves into believing almost anything. So again “well-meaning” in the sense that if it was good for themselves and their campaign contributors, it must also be good for everyone else.

          I work in a very political (local government) environment. I watch otherwise decent elected officials make poor decisions quite often. Generally because they want to believe it is the right thing to do, and not because it enhances the profit making abilities of a local developer.

        • Michael Fiorillo says:

          Funny how the policy proposals of the Overclass – lowering taxes, busting unions, privatizing public resources, etc. – overlapped so closely with their finacial and polkitical interests.

          Nobody planned it? Then how would you describe the policies and “research” churned out over decades by Overclass-funded think tanks and policy shops?

      • TJ Martin says:

        Agreed Kent . The reality is once you delve into the details and facts .. pushing aside all conspiracy theories alt facts and quasi populist lies .. not to mention avoiding over generalization like the plague itself … is that all economies across the globe though having some similarities are far too diverse and convoluted with far too many factors involved to lump under one single more often than not ludicrous and if I may somewhat inane theory or conspiracy .

        Because nobody with half a brain plans failure or intentionally tries to create their own eventual demise … which is what the dissolution of the Middle Class would cause . Nobody !

        Is this to say some change is not in order ? Or that the status quo should remain exactly as it is intact ? No ! Of course change is necessary . It always is because the world around us is always changing .

        But will destroying the so called .. Elites .. breaking up the banks .. demanding the .1% at the end of a barrel give up their riches while insulting them .. trying desperately to recreate a past long since passed or chasing after ScapeGoats to crucify accomplish the ‘ change ‘ needed to at least somewhat rectify the situation ?

        No .As history has shown time and time again those actions will only serve to exacerbate the situation as the elites and .1%er’s take an even more defensive stance digging in deeper than they already are [ as you would if you were in their place ] So what can you ask ? Much as the neopopulists … the ignorant and the uniformed may be loath to admit it … the change needs to come from within.. as it did when Teddy Roosevelt was in power … breaking up the robber barons and monopolies not with blunt force … but by convincing them it was to their benefit to do so because he was one of them albeit with a social conscience and an eye towards the future

        Any other tactic including jumping down Alice’s Rabbit Hole of delusional economic theories or the election of DemiGods and wanna be Potentates will only serve to make matters worse

        In the mean time in order to maintain ones sanity … we need to observe …. and admit that for the moment … Kafkaesque is the best definition for the current Goat Rodeo we’re in . All of us .

        • Smingles says:

          One of the best comments I’ve seen on this site, ever.

          Unfortunately, if you believe the Clintons, Soros, Kochs, and Bushes of the world are conspiring to make things horrible for the 99% at annual Bildeberg conferences, this type of common sense probably won’t resonate.


      • Wilbur58 says:

        The government is owned by the banks, the FIRE sector.

        I get tired of this line of thinking because it causes idiots to become anti-government. We need good government in human societies, strong government.

        • Frederick says:

          Ridiculous and ignorant comment Mr Wilbur

        • Wilbur58 says:

          Care to be more specific, Frederick?

          At present time, god knows this nation is not being run by and for the people. An enormous percentage support more redistributive policies that don’t get enacted.

          Wall St has 5 lobbyists for every member of congress. The banks control money creation.

          They’re now getting over 20% of gdp.

          How do they make money? Interest, duh. The Wall St whiz kids aren’t as skilled in gambling as they think.

          This thread is about the death of retail store fronts. Why, because rents are too high? No, because mortgages are too high.

          Why the hedgie asset stripping? Borrowed money for this crap because credit is no longer used for productive goods and services. Wall St looks to make money for itself instead of serving as the social utility it should be.

          Why are most presidents unable to pursue their elected initiatives? They’re not in control.

          I hope you weren’t just being technical and the banks not legally owning the US. So I look forward to reading what gives you the right to call me ignorant and ridiculous.

        • MarkinSF says:

          Good comments. Don’t get upset by people like Frederick. They don’t have a clue.

        • I M says:

          I think you meant “limited government” not “strong government”. At least I hope you did.

        • Wilbur58 says:

          No I M,

          I said a strong government and I meant it. If it makes you happy to say “strong, but limited”, knock yourself out. But the Founding Fathers didn’t go with the initial Articles of Confederation because it wasn’t strong enough.

          They wanted government to have the all the powers for war. The power to regulate interstate commerce. The power to provide for “the general welfare”. To never get run over by corporations as it has today. Here’s Jefferson on that subject:

          “I hope we shall crush… in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country.”

          Here are a few links about this:



        • chris Hauser says:

          yes, for the most part. all those contradictions.

          but that’s makes the system run.

        • He Who Walks Behind the Rows says:

          Teddy Roosevelt once said that the only the defense the common man had against the upper classes was the government and he was right. My impression is that the ones really pushing the “small government” concept were the toadies and flunkies of the upper classes who are eager to betray their fellow citizens in hopes for a few crumbs from the tables of the high and mighty.

    • cipher says:

      Does this mean my buddies and I won’t be able to glubb down12-packs of canned beer in front of America’s Greatest Televised Sports Heroes weekend after weekend after weekend indefinitely?

      Does it mean we ought to trim our sails, band together and start doing productive things that serve customers instead of our baser natures?

      What’s this world coming to?

  20. Jim says:

    Wolf. When do you expect cars to go to the way of web sales? There is no reason that we couldn’t build and buy a car via the net. In fact you can now but then the manufacturer puts you in contact with a dealer, with markup, to take delivery (unless you do a Euro factory delivery with Volvo or BMW). Think of all the inventory savings with direct car delivery. Dealers are little more than warranty repair shops anyway and that would allow them to reduce their real estate and inventory costs and maybe be more profitable. There is a NorCal company called Cartelligent which essentiall fulfills this function.

    I am personally a fan of three year old, off lease, low mile used cars which have been depreciated but are essentially new and still under warranty. Dealers could still handle this inventory.

    Why hasn’t the car industry (one of your favorites) gone digital?

    • Wolf Richter says:

      A car is very big and physical. It’s expensive to transport. The sale of cars is highly regulated. There are insurance requirements, registration requirements, titles, tax issues, financing, liens, trade-ins (dealers want to inspect them), and the like. Everything requires disclosures and signatures.

      Dealers have tried for years to sell cars online. But there are so many complications that it’s just easier to finish the key parts of the transaction at the dealership.

      If it gets to the point where you can really easily buy cars online, automakers could do it without dealers, and new car dealers would wilt just like Payless. States have franchise laws in place to protect dealers from the power of automakers, so I don’t know if this will fly legally. If this is the future, it will take its time.

      • Suzie Alcatrez says:

        It is illegal in Texas for Tesla to sell cars directly to the public.

        It is very strange in 2017, that one cannot order a custom built car from GM, but rather you have to buy what ever a dealership has sitting on the lot.

        • Wolf Richter says:

          Yes, Tesla has had problems in some states trying to set up factory-owned outlets.

          Factory-owned outlets used to be a total no-no under state franchise laws (for example, if allowed to open its own factory-owned outlets, GM could directly compete with its GM dealers and wipe them out).

          But there are ways to get around this. In Tulsa, back in the late 90s, Ford acquired ALL Ford dealerships as an experiment and ran them (same locations) as Ford-owned stores. This was worked out with state regulators in advance. But operationally, it was a failure. And eventually, Ford sold the stores.

          Since Tesla has no franchised dealers, there has been a lot of flexibility in most states to allow Tesla to set up its outlets. But there are still some states that don’t.

          My understanding of the situation in Texas (and most other places) is that you can order a custom-built GM car, but you have to go through the dealer to buy it (and most likely to order it). You’ll negotiate the price with the dealer, and you’ll pay the dealer.

      • Wilbur58 says:

        Just like with pro athletes and Hollywood talent, rich labor still has its labor unions. They’re the only ones left.

        While not exactly the same thing, auto dealerships basically have strong unions as well.

    • william says:

      Carvana.com is getting popular in Austin. They have better prices than the local dealers and all the popular models. It’s questionable if their business can be effective everywhere, yet it seems to be working here.

  21. RD Blakeslee says:

    “So please … somebody convince me this present economy from stem to stern isn’t the very definition of the term .. Kafkaesque . Anybody ?”

    Why try?

    “Achievement of your happiness is the only moral purpose of your life, and that happiness, not pain or mindless self-indulgence, is the proof of your moral integrity, since it is the proof and the result of your loyalty to the achievement of your values.” – Ayne Rand

    • TJ Martin says:

      Cute … but entirely irrelevant to the question . Due in no small part to your taking that quote completely out of context leaving out the blatant narcism , greed and self interest to the detriment of all others that is part and parcel of the Gospel of Ayn Rand .

      See what happens when you read ‘ about ‘ something .. rather than directly reading that something in its entirety ? FYI there’s a term for that common error . Its called ‘ Proof Texting ‘


    • alex in san jose says:

      Ooh! Ayn Rand quotes! I love those!

      *What did Rand admire so much about Hickman? His sociopathic qualities: “Other people do not exist for him, and he does not see why they should,” she wrote, gushing that Hickman had “no regard whatsoever for all that society holds sacred, and with a consciousness all his own. He has the true, innate psychology of a Superman. He can never realize and feel ‘other people.’”*

      – About Ayn Rand’s infatuation with a serial killer who dismembered a 12-year-old girl.

    • Michael Fiorillo says:

      More circular reasoning from the Divine Bag Lady of the Right.

    • Jerry Bear says:

      RD, if you insist on bringing up Satan Herself, expect to get dog piled! ^,..,^
      For an entertaining read, enter “Ayn Rand Antichrist” into Google and see what comes up……….

      “I give people Ayn Rand, with trappings.” Anton Szandar La Vey, High Priest of the Church of Satan

  22. Michael says:

    Because its difficult to channel stuff if you do not have dealers who allow them to book sales and hide their inventory

  23. DK says:

    With Amazon prime, I get 2 day delivery. And a huge selection. I don’t have to drive to the stores and all the time wasting that goes with it. If I need advice about a product or something about what I’m trying to do, YouTube will most likely have many videos on “how to” about it. And also have pretty good product reviews as well. For clothes, thrift stores are an amazing value. I’m guessing that Dollars stores are doing pretty well in this environment.

    • DK says:

      I go to YouTube for product reviews. I think Amazon can have a bias

      • alex in san jose says:

        I find it helpful to go to a variety of sources, YouTube is a good idea; depending on the product there may be reviews by magazines, hobby groups, etc too. This is pretty much how the internet was intended to be used, or very close to it.

  24. RD Blakeslee says:

    “If I need advice about a product …”

    Amazon customer’s user ratings are the most valuable information about products I have yet to find.

    Don’t subscribe to Consumer Reports mag. anymore. Amazon’s evaluations are better.

    • kitten lopez says:

      “Amazon customer’s user ratings are the most valuable information about products I have yet to find.”

      but ratings are also rigged in so many ways because they know people still believe that.

      • MC says:

        “Come on, the reviews on Amazon were great!”
        “Yes, the ones you wrote!”

        From My Name Is Bruce

      • RD Blakeslee says:

        kitten, Amazon verifies it’s customer ratings are from actual buyers of the product on Amazon and I have found their commentary to be dead on.

        My own practice is to post a review only when I have something to tell about a product that might not be apparent to a first-time buyer. Good, or bad.

        • beadblonde says:

          With a little practice it’s easy to tell useful reviews from useless reviews. I agree I learn more from the best Amazon reviewers than I ever would from Consumer Reports. And Amazon gets the best for free.

        • kitten lopez says:

          promotional costs are so high already. they pay people to be “cool” and product place items just by SITTING in local cafes or start conversations on the internet. hell, they turn regular folks into shills for only 10% coupons. people are cheap and care nothing for privacy.

          and since celebrities and authors and speakers PAY people to tweet for them and keep up on their social media, even if i had a high-priced item ($300+) it’d be SO worth it to “buy” the verified reviews. the way the reviews are already so valuable (only as long as they’re TRUSTED) i’d HAPPILY invest for a bunch of “customers” to “buy” the product and give good reviews. they already “pay” to give free merch out for reviews and many post that.

          i know i sound like Petunia (SOMEONE’S got to!), but watch… it won’t be long til your “verified” reviews start to sound fishier and fishier.

          tech is brilliant as it’s developed by sociopaths and psychopaths who prey on humanity’s weaknesses and well… HUMANITY. it’s astounding and incredible. like paying child psychologists to get children to harangue their folks for a particular cereal or toy.

        • TJ Martin says:

          Congratulation Mr Blakeslee.. you’ve bought Hook , Line & Sinker into the Amazon ratings myth … along with the plethora of other myths you seem to hold so dear . A word Mr Blakeslee .. investigate … as in thoroughly before believing .

        • kitten lopez says:

          also, it’s not a big deal to have a dozen “friends” or professional social media reviewers (they court their own “reliability” just like tv people) order your stuff online and write a review and they can even RETURN it (say it broke) within the return time for free and they are “verified.” it’d take awhile to un-do such a thing because magazine/newspaper reviews have always been subject to payola, like DJs used to be before corporations dictated paid for play lists.

          it’s ALL rigged.

          there is NO santa anymore. particularly not at the house of jeff besos, that’s fo’ sho.

          i use them to research PRICES and some reviews (yeah, some honest people lift up all proverbial BOATS even–especially— in hell). then i go to the original site and buy direct because i feel covered in maggots just GOING to amazon. i have to bathe right after.

        • alex in san jose says:

          Kitten Lopez – This is why I, and my boss, are big fans of what we call “trailing edge technology”.

          I’m not sure how old this computer I have is, it’s a few years old anyway. I got it for $200 with a 30-day warranty. It has a better battery life than a new MacBook Air, speaking as someone who was a sucker and bought one of those years ago. It has plenty or RAM, can do anything I want and more, and it just f*cking perfect … for $200. When it breaks, I’ll go out and get another $200 computer. My boss is cheaper that I am. He likes to see just how old a computer he can put Windows 7 onto, and he gets his computers for somewhere around 30 bucks. He buys so much electronics surplus that if he’s on the lookout for a new comp he usually just gets it thrown in.

          Any new thing that comes out, I want to wait for Version 3.x at least.

        • Michael Fiorillo says:

          Alex in San Jose is right: nothing dulls faster than “the cutting edge.”

    • TJ Martin says:

      Ahem … It is a known and well publicized fact that Amazon spoofs , loads and rigs its user ratings and comments as well as more often than not editing out the majority of negative user ratings .

      Which is to say … Amazon’s ratings are among the most unreliable in existence

      • RD Blakeslee says:

        Ahem …Do you actually buy anything on Amazon, TJ?

        ” It is a known and well publicized fact …” – Citation please?

        • kitten lopez says:

          i’m afraid i have to agree… you’ll see amazon reveiws used elsewhere and everywhere or other reviews ON amazon (like on walgreen’s sites or makeupalley.com–the manufacturers seem to “start” the comments/reviews and salt the internet with the SAME exact phrases).

          but like the reality of a smart phone’s security, it’s not in any tech company’s interest for you to hear about the scams and realities of ads/ etc because the money they make is based on made up realities no one can verify.

          (man i’m SO channeling Petunia. i can feel it)

      • kitten lopez says:

        testify, brother. it’s brilliant how amazon and yelp get all that “trusted” free content people use (and up their site value with tics), just by complimenting the lonelier people who love to spend all their free time typing free reviews, and giving them gold stars like grade school teachers used to do on our papers.

        and then they go around with all this new yelp power demanding stuff. it’s CRAZY.

        reviews are lies. when you hear the reality of airbnb and uber/lyft stories behind the b.s. to stay in the game you’ll never believe another review ever AGAIN.

        • RD Blakeslee says:

          kitten, I can only say I’ve bought HUNDREDS of times on Amazon and have had mostly good experiences there and have found users reviews (particularly the one and two star ones) very helpful.

          I publish the same kinds of reviews myself, when I think it would be helpful to other buyers at Amazon.

        • RD Blakeslee says:

          kitten, I’d like to tell you a little more about my experience with reviews at Amazon.

          I’m an old man and I use hearing aids, which are imperfect – they help, but cannot make old ears hear like young ones. Hearing dialog from the TV was particularly deficient, until I discovered a bluetooth wireless earbud headset for sale on Amazon.

          Leading up to the purchase I reviewed the dialog over a period of some time in the reviews, between the U.S. marketer of the product and the Asian manufacturer and improvements were made and acknowledged by the users.

          Now to the point: The little headset was a miracle for me! It made dialog from the TV as clear to me as it had been years earlier. But that discovery was not reflected anywhere in the over a thousand reviews! So, my review highlighted that special utility for oldsters. While it is not of general interest (nothing exclusive to old people is, in the U.S. mileau these days), The information was NOT fake, NOT manufactured by Amazon or its Merchants and, so far as I know not available anywhere else.

        • Jerry Bear says:

          I have to agree with RD on this. I am wary about Amazon reviews but if I sift through them carefully I nearly always find useful information about a product. Also the “some answered questions” section.

      • Megen says:

        As an Amazon shopper I can verify that “Reviews” are not always legit on Amazon. I’ve gone through reviews for a particular items to learn that the review didn’t match the item it was supposed to review. Like the seller took an old item (and it’s reviews) and then change it to another item but still kept all the old review ratings.

        • RD Blakeslee says:

          I have seen that, too, Megen. It usually happens when there has been a series of upgrades on a product which has been marketed for some time on Amazon. Also, some reviews containing no factual recitation of personal experience with a product are not useful. As with any online content (even Wolfstreet!) one must use good judgement.

  25. Matt says:

    Fascinating data that bring up a few more questions:
    1. The red line is recession invariant. Are department-store patrons mostly people on government-sourced incomes? If so, does that mean they’re slowly dying off?
    2. The range of a small electric van is ~100 miles. How much of the U.S. population is thus within range of driverless delivery? What does this fact, plus high city rents, mean for vehicle fleet vs. retail sales (i.e.: how soon before vehicles are mostly commodity sales)?
    3. Does a delivery economy breathe new life into the viability of suburbs? If transport is electrified & driverless it could be supported with coal rather than oil. We still have 100 years or so of domestic coal.

    • Kent says:

      “We still have 100 years or so of domestic coal.”

      We actually have longer than that. The problem is that we’ve dug up and burned almost all of the high-quality easy to get at coal. What’s left is pretty low-grade and relatively expensive (still some good stuff in WY).

      Natural gas will continue to be the fuel of choice IMHO. It is a natural (and free) byproduct of oil production. And burning it doesn’t produce lots of ugly black smoke and carcinogens.

      • RD Blakeslee says:

        “(still some good stuff in WY).”

        Also, some of the best anthracite in the world (used in iron ore reduction) is in Southwestern WV.

      • Matt says:

        Expensive (fracked) natural gas and petroleum liquids aren’t on par low-quality (expensive) coal in the same way that anthracite was vs. light sweet crude squirting out of the ground back in the day?

        The broader question remains. Electricity is generated with coal and natural gas. This puts them in direct competition with, and an economic substitute for, petroleum as a transportation fuel. Thus, does a delivery economy, facilitated and enabled by the existence of e-commerce, make suburbs viable into the distant future? We’ve been told that the suburban living arrangement is doomed to failure once liquid fuels become too expensive. This data — at least for me — calls these assumptions into question.

        • Kent says:

          Suburban living arrangements existed prior to automobiles. They were just an arrangement for the very prosperous. As energy costs go up relative to incomes, the living arrangement will no longer be possible for some. But it will last well into the future. The question is really just where you personally want to be in that future.

        • alex in san jose says:

          Kent – they were called “streetcar suburbs”.

        • Michael Fiorillo says:

          Yes, they were “streetcar suburbs,” until subsidiaries of the auto, oil and rubber companies bought the streetcar companies and killed them off.

          For the old-timers (the 80’s!) who remember, the plot of the animated film “Who Killed Roger Rabbit” was based on the willful destruction of LA’s once extensive street car system.

    • TJ Martin says:

      Coal .. coal mining and coal mining jobs are a dead issue destined for the relegation bin especially as it relates to the production of electricity . As well as EV’s create more problems than they solve .

      So electrifying transportation [ while ignoring and diminishing trains the ultimate in hybrid electric transportation ] is the current ” Technological Bluff ” [ by Jacques Ellul ] of the 21st century . The future ? To paraphrase a line from ” The Graduate ” ..

      ‘ …. one word …. hydrogen ‘…the one future even Big Oil can profit from … albeit that future being somewhat far off at the present rate of development

  26. tony says:

    I am not sure if it was this web site but someone recommended a book title THE GREAT DEPRESSION by benjamin roth he kept a diary from 1929 to 1970 he wrote in it every few days he was a lawyer. He explains what he saw happening i did not realize how many other depressions this country had.You can get this book used from better world books for $12.00 most of their books are used library books in almost perfect condition. I could not put this book down read it in 3 days. You will not believe how all the conditions we have now are a repeat of past history.His biggest belief as his 14 diaries were being written were to have cash on hand to buy good deals in bad times have patience and not get greedy. He could not believe how fast people forgot 1929 and repeated the same mistakes as soon as things got a little better. This book is not your usual book on the depression and buisness it has a real common sense way of looking at life.

    • RD Blakeslee says:

      Tony, a few of us have lived Roth’s prescription for decades.

    • RD Blakeslee says:

      tony, I found the book on Amazon.com – $ 7.94 – used library book, as you predicted. Thanks for the tip – looking forward to reading it.

      BTW, Amazon.com Prime has it for sale, new, in paperback, at a little higher price.

      • alex in san jose says:

        I should see if my library has it.

        My “cornerstone” is the 1970s. We went from middle-class with only my father working, to just about the very poorest Welfare people that could be found. I don’t want to go into details unless asked, there are too many of them.

        A humorous thing though: A local place had a sign up: “Hot Dog 29c Your Own Bun”.

        • RD Blakeslee says:

          Has anyone thought that there may have been unintended consequences of women’s lib?

          For example, was it cynically co-opted by the international corporatocracy to get two workers out of a family for the price of one?

        • d says:

          How about to convince them, that every husband and wife NEEDEd their own privet house, they could afford it with two wages, and their parents could afford to fend for them selves as they had Social Security.

          Great wealth transfer trap.

          The front end of the boomers, the most. coddled selfish and pampered generation, this planet has ever seen.

          Their NIMBY attitudes to other’s effected by the housing shortages in many places, is to say the least, completely unacceptable.

          Let alone their attitude to the tail of the baby boom, who have been forced to pay all their lives to support the front end and will get Nothing, compared to the assistance the front end got.

          The other reason the global economy is stagnating, the front end, and centre boomer’s, the Globalised Vampire Corporates, and china, are all the same, they have bled the system White, and they aren’t willing to put anything back in.

        • kitten lopez says:

          “Has anyone thought that there may have been unintended consequences of women’s lib? For example, was it cynically co-opted by the international corporatocracy to get two workers out of a family for the price of one?”

          RD Blakesee! yes, we talk about this at home. / same thing with segregation.

          the moment you get ahead, costs go up. i have a lot of issues about feminism being just about getting more crap and having the right to be an elitist asshole. and not about it being emancipation for everyone after all.

  27. David Rohn says:

    Back when retail sales first started to sag we were told by the authorities and experts (and the MSM parroted it without questioning) that it had been ‘a very cold winter’ then it was ‘a very hot summer’ etc.
    Then we were told everyone was shopping on line.
    Maybe… but is it at all possible that the ruthless landlords former homeowners now deal with (after their foreclosed homes were sold to BIG PIG Equity firms for pennies on the dollar, and were then forced to buy inflated health insurance premiums from an Insurance Cartel (that s done nothing but merge and consolidate since), simply don t have disposable income to consume much else anymore??
    -So sad that ‘our elected representatives’ allowed the financialists (who are now turning the screws of their ‘asset strip mining’ on pensioners, student debtors , subprime auto borrowers, and taxpayers in general, sold out the American Middle Class to the highest (or lowest bidders). The US Middle Class was the envy of the world and the bulwark of American economic and political stability, and it s been thrown under the bus by a bunch of self congratulatory monsters from Harvard and Princeton who think they know everything and are superior….Sadly they were t even taught how the system worked; they ve just destroyed it for quickie profit and now there s going to be hell to pay.
    The people ARE the economy: not a bunch of elitists who spend their time trying to squeeze profit out of manipulation and deceit.
    The moral rot is in academia, in finance, in DC and in Journalism…and IT STINKS to hell.

    • Frederick says:

      David Rohn couldn’t agree more

    • Jonathan says:

      What good is U.S academia these days anyway, besides turning naive and irresponsible kids into SJW fueled whiners with worthless degrees and mountains of debt while expecting everyone else to pay it off as if its their right.

  28. Tom Kauser says:

    The new cars at the rodeo are growing faster than a rank bull!

    The dealerships and two visits from the trump campaign and Norse Penrose is saved (soon to be bought out by the Broadmoor?)

  29. Lotz says:

    I was at Home Depot and just looked at the Ryobi 18v batteries. They had the standard unit for $39 and a duo pack for $49. Right then I walked away because that screams scam. I can order a duo pack for $39 on amazon which I did.

    I hesitate buying anything there because they’re SO overpriced. The CEO’s 1.3 million isn’t coming from my back. I did buy 4 PVC plastic pipe elbows for 65 cents each and that cost about 3 cents to make.

    Make me wonder how real estate will be doing with retail vanishing.

    • mean chicken says:

      You forgot to mention, quite often this stuff is made in China. Except now it seems they’re displacing wildlife habitat in Africa in favor of the low wagw sprawl that has developed that which was China.

      Sorry to say, jobs are still leaving the US in droves as globalization moves forward, while robots are making progress as well (Robots might save wildlife habitat from being taken over by humans, not sure?).

  30. DH says:

    I just can’t imagine how anyone is surprised by this. Many clothing/shoes retailers offer paid shipping for returns now days, and that, combined with Amazon Prime shipping, has drastically increased my online shopping.

    I mean, our family essentially only buys groceries and the rare odds and ends at a physical store. We occasionally go to the mall to get out of the rain, but we rarely buy anything there, outside of the darn Disney Store that lures in our 5 year old. lol

    FWIW, we fortunately have a good salary (knock on wood,) too, so it isn’t just about about saving money for us. We simply spend it all online, although online shopping certainly makes price comparing much easier, so that is a financial advantage, too.

  31. stan says:

    One reason customer service is withering away is because American labor is taxed very heavily. To restore the competitiveness of American labor, we need to destroy the federal income tax on wages, salaries, and tips (line 7 of the 1040 tax form). Without this ball and chain around the legs of the American worker, there would be more jobs available for everyone.

    • Mike G says:

      One reason customer service is withering away is the dehumanizing, micromanaging MBA mentality that treats all businesses as interchangeable widgets to be managed by the numbers and treats front-line employees like crap.
      It’s demoralizing seeing your workplace shuffle through a succession of ripoff private-equity buyers, with a rotating circus of clueless management who spend their energies on financial games and slashing quality to shave pennies, screwing down wages and screwing over employees as far as they can.
      You can still find good service at smaller establishments and a few exceptions like Costco that have the reputation of treating their staff well.

  32. Lee says:

    Guess what folks, Amazon is coming to Australia. Physically buying huge warehouses and actually setting up ops here.

    We already have an Australian online platform for e-books and such, but no bricks and mortar ‘retail’ operations. Purchases of physical goods must be shipped in from overseas.

    Numerous articles on what it means for other retail stores here.

    IMO I hope they do in fact decimate the retail industry here. It is about time that some real competition shows up for consumers. Customer service in retail stores here stinks.

    Instead of focusing on ‘the mother of all shorts’ , the banks, I would suggest that the Amazon planned action would have a really ‘nice’ impact on retail share prices (OOPS – it already has.)

    And as I have already posted before, all ‘supplier provided products’ imported under A$1000 are going to be hit with a 10% GST as of 1 July this year. Over $1000 there is no change.

    Ebay is still thinking of banning Australian buyers as it indicates it won’t comply with the new regs.

    This 10% tax was basically planned and thought up by the big retail outfits here so that they could ‘compete’ with those nasty, unfair offshore online retail outfits who were able to supply the same product at much, much cheaper prices even when adding on the cost of postage.

    At one time the government here thought about implementing a plan like that, but determined that the cost of collecting the GST would be more than the amount it would bring in. Plan dumped for a while.

    No problem though. Just get some of those retail billionaires to cry to the government and all of the sudden we consumers are going to get hit with a 10% price increase on those purchases.

    Australia is basically a small economy dominated in many sectors by a few number of large players. And when that happens that old economic theory regarding monopoly and oligopoly pricing behaviour works just like it is supposed to.

    Like gasoline prices. They recently fell to A$1.17 a litre right before the Easter holidays. On Easter Monday, the price shot up to A$1.399 per litre – everywhere.

    An 18% price increase in one day at a time when the Australian dollar was going up and the price of crude was tanking below US$50 a barrel.

    The banks here also do the same thing. The latest round of interest rate increases in slowly being implemented on interest only real estate loans. Two of the big four have increased rate recently. The other two will probably follow suit in the next two weeks. Another couple of billion dollars of profit added to the bottom line of the banks.

  33. R Davis says:

    I hear what you are saying .. but
    Are you sure it is online retail that is the cause of the massive down turn ?
    Is it possible that the retailers didn’t turn themselves into unrealistic monsters .. for listening to ignorant financial firms chant “the only way up is growth” “growth” “growth” .. when it was against all the odds that the population of the world would blow up to
    The children who should be the ardent & lucrative consumers of today .. are not born.
    And they will never be born.
    The business world was duped by .. who told the lie that the planet was overpopulated ?
    That the mindless rats continue to breed unabated.
    Because it was a deliberate lie .. told by whom & for what reason & it has served blow up in the faces .. of most certainly manufacturing & retail.
    Everyone need to search their minds & try to realize what went wrong .. or it can’t be fixed.

  34. alex in san jose says:

    This is a popular post!

    OK before I read over all the retail doom goodness, I want to say that all of the stores mentioned, I’ve mostly never shopped at, or not shopped at for literally decades.

    In my own case, I’ve found that it’s entirely possible to, on an income just below $13k, be liable for almost 2 grand in taxes. I had most, but not all, of it on hand last week. So I’m spending as little as possible for the next two months.

    I literally just bought 3 potatoes at Sprouts, thinking they were 3 for 99c, turns out they were 3 lbs for 99c, and my purchase was something like 65c. I then scarfed 3 pears and a nice onion out of their dumpster out back, which they leave open and even leave a helpful upended milk crate as a step-stool, to help the local homeless, of which there are many. (I look in dumpsters for shipping materials, and that’s how I found out about this – that being said, there were some really nice Brussels sprouts in there too, hmmm…)

    I have decided to be a teetotaler simply because alcohol is just too damned expensive. Time to go back to living like I did in my early 20s, when even a 99c Budweiser was too much of an extravagance.

    I plan to buy soon, but now must put off until after May: A pair or two of shorts, more t-shirts, some sox, another pair of Vans, a few decent woven shirts, maybe a new pair of glasses, and probably some other stuff I’m not thinking about right now.

    Most of this stuff is from local stores like Ross. That plus the no more booze rule means I’ll be spending a lot less.

    I’ve discovered shopping on Amazon and it’s great when I can’t find things locally. Or, I can find it locally but over in, say, Sunnyvale, which means a fair amount of time on public transit or a very long ride on the bike.

    In other words, I’m really “trimming my sails” and I’m going to guess everyone else is too.

  35. LeClerc says:

    Want to understand the decline of malls and their retail tenants?

    Think about what kind of country we were in the 1960s and early 70s when malls were at their peak.

    Malls are downstream of general prosperity.

    • rejected by target says:

      Back then, even as late as the 1990s, I recall malls had actual NICE stores that every age group could enjoy. Today, it seems their only purpose is to pander to teenagers. A few chain names that I fondly remember include Casual Corner, Petite Sophisticate, and even The Limited where I remember going with my mom when I was a teen and BOTH of us could browse/buy from these stores. One mall here had a standalone Liz Claiborne store (was my favorite brand before they sold out to JCP) and Charter Club (ditto with Macy’s). At 49, I have no use for stores like Forever 21. Malls seem to exist only for teens/junior shoppers (a group who — the last I heard — didn’t have that much money to spend…hmmmm).

      • TheDona says:

        “NICE” stores….that actually had nice QUALITY products. It’s all the same cheap crap now. Brands mean nothing anymore. When the Bean Counters own fashion, then game over.

        • economicminor says:

          In the game for the banksters is to make lots of money in new loan charges. They get a % of every transaction. For them, the interest rates are not the issue because they off load all the loans in CRMBS. So the lower the interest rate the higher the loan value… and the bigger their profits. They are all short term, quarterly profit magicians. Long term planning is not their game.

          In the end though, they did this before and got bailed out.. They have a business friendly Congress and President still and most likely don’t see any down side to their actions.

          For us it is different. The higher the loan value, the higher the real estate value, eventually the higher the loan service costs. The higher RE values also drive up the property taxes. In the end that means the rents go up and up and up and the consumer never sees a benefit. In fact the consumer keeps paying more with a degraded income.

          And the gubbermint loves it.. Local gets higher RE property taxes and the Washington gets inflation.. which they believe in because they believe they can pay off their debts with inflated dollars…

          The only out for the store or restaurant is to lower the quality for the same price… And ALL the real benefit goes to the Banksters!

          Until they crash the system again.. and get bailed out again..

  36. Gershon says:

    More on the decline of the retail sector. But our rigged, broken, manipulated “markets” are getting juiced by a “relief rally” over French voters embracing their serfdom, so all is well.


  37. Realist says:

    According to my experience the PE model is usually 20+80, ie 20% paid cash and 80% in debt that is added to the bought company’s balance sheet. The 20% of the price paid is quickly pumped out of the company as extra dividends etc. Developement and research is cut to minimum or completely to free funds for payouts to the PE owner. This works for a few years, but sooner or later tje chickens will return home to roost and then the bought company is toast. How much of this are PE owned retailers experiencing cutrently, especially as the IPO window has closed for retailers ?

  38. BRF says:

    This site is by far one of the better information sites one can use in trying to understand what the economy is doing where the rubber meets the road. This said the world economy is now largely a centrally planned affair and it becomes very plain that the greed of the apex elites has taken their eye off their tactical agendas in advancing their strategic goal of one world governance under their auspices as the backlash to this neo-liberal looting rule by the financial and corporate purveyors of neo feudal capitalism mount.

    • harvey says:

      Right on, I think one of the libertarians faults is that the opposite of individualism is not collectivism, but it is collusion, and we live in a world where that is happening everywhere.

      • d says:

        Collusion or Group think.

        Group think, becoming a huge issue, when the “think” is. Flawed or just plain wrong.

  39. Mike says:

    Hi Wolf,

    Online sales are only 8% of retail sales, so I don’t think that it makes much of a difference if it goes up.
    Consumers are just tapped out, that’s why retail is collapsing.

    • Wolf Richter says:

      Total retail sales rose 5.2% in March year-over-year, so it’s not “collapsing.”

      Retail includes all kinds of things, such as auto sales (= 21% of total retail), grocery sales, and of other things that don’t have much in terms of online sales. So looking at total retail is a little off target. That’s why I included the chart of sales at department stores as a stand-in for mall-type retail sales.

  40. Frederick N says:

    “PE firm asset-stripping special”-Brilliant

  41. Ambrose Bierce says:

    It comes down to support, and most brick and mortar just don’t cut it. I have had good help at Walmart, but I understand its not always that way.

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