Recovery? We Have Tripled The Number Of Store Closings From Last Year...

Authored by Michael Snyder via The Economic Collapse blog,

Did you know that the number of retail store closings in 2017 has already tripled the number from all of 2016?

Last year, a total of 2,056 store locations were closed down, but this year more than 6,700 stores have been shut down so far. 

That absolutely shatters the all-time record for store closings in a single year, and yet nobody seems that concerned about it.  In 2008, an all-time record 6,163 retail stores were shuttered, and we have already surpassed that mark by a very wide margin.  We are facing an unprecedented retail apocalypse, and as you will see below, the number of retail store closings is actually supposed to be much higher next year.

Whenever the mainstream media reports on the retail apocalypse, they always try to put a positive spin on the story by blaming the growth of Amazon and other online retailers.  And without a doubt that has had an impact, but at this point online shopping still accounts for less than 10 percent of total U.S. retail sales.

Look, Amazon didn’t just show up to the party.  They have been around for many, many years and while it is true that they are growing, they still only account for a very small sliver of the overall retail pie.

So those that would like to explain away this retail apocalypse need to come up with a better explanation.

As I noted in the headline, there are 20 different major retail chains that have closed at least 50 stores so far this year.  The following numbers originally come from Fox Business…

1. Abercrombie & Fitch: 60 stores
2. Aerosoles: 88 stores
3. American Apparel: 110 stores
4. BCBG: 118 stores
5. Bebe: 168 stores
6. The Children’s Place: hundreds of stores to be closed by 2020
7. CVS: 70 stores
8. Guess: 60 stores
9. Gymboree: 350 stores
10. HHgregg: 220 stores
11. J.Crew: 50 stores
12. JC Penney: 138 stores
13. The Limited: 250 stores
14. Macy’s: 68 stores
15. Michael Kors: 125 stores
16. Payless: 800 stores
17. RadioShack: more than 1,000 stores
18. Rue21: up to 400 stores
19. Sears/Kmart: more than 300 stores
20. Wet Seal: 171 stores

If the U.S. economy was really doing well, then why are all of these major retailers closing down locations?

Of course the truth is that the economy is not doing well.  The U.S. economy has not grown by at least 3 percent in a single year since the middle of the Bush administration, and it isn’t going to happen this year either.  Overall, the U.S. economy has grown by an average of just 1.33 percent over the last 10 years, and meanwhile U.S. stock prices are up about 250 percent since the end of the last recession.  The stock market has become completely and utterly disconnected from economic reality, and yet many Americans still believe that it is an accurate barometer for the health of the economy.

I used to do a Black Friday article every year, but I have ended that tradition.  Yes, there were still a few scuffles this year, but at this point the much bigger story is how poorly the retailers are doing.

So far this year, more than 300 retailers have filed for bankruptcy, and we are currently on pace to lose over 147 million square feet of retail space by the end of 2017.

Those are absolutely catastrophic numbers.

And some analysts are already predicting that as many as 9,000 stores could be shut down in the United States in 2018.

Are we just going to keep blaming Amazon every time another retail chain goes belly up?

What we should really be focusing on is the fact that the “retail bubble” is starting to burst.  In the aftermath of the last financial crisis, retailers went on an unprecedented debt binge, and now a lot of that debt is starting to go bad.

In fact, in a previous article I discussed the fact that “the amount of high-yield retail debt that will mature next year is approximately 19 times larger than the amount that matured this year”.  This is going to have very serious implications on Wall Street, but very few people are really talking about this.

Most stores try to stay open through Christmas, but once the holiday season is over we will see another huge wave of store closings.

And as individual stores close down, this will put a lot of financial pressure on malls and shopping centers.  Not too long ago, one report projected that up to 25 percent of all shopping malls in the entire nation could close down by 2022, but I tend to think that number is too optimistic.

The retail industry in the United States is dying, and the biggest reason for that is not Amazon.

Rather, the real reason why the retail industry is in so much trouble is because of the steady decline of the middle class.  The gap between the ultra-wealthy and the rest of us is greater than ever, and we can clearly see the impact of this in the retail world.

Retailers that serve the very wealthy are generally doing well, and those that serve the other end of the food chain (such as dollar stores and Wal-Mart) are also doing okay.

But virtually all of the retailers that depend on middle class shoppers are really struggling, and this is going to continue for the foreseeable future.

Most American families are either living paycheck to paycheck or are close to that level, and these days U.S. consumers simply do not have much discretionary income to play around with.  More hard working Americans are going to fall out of the middle class with each passing month, and that is extremely bad news for a retail industry that is literally falling apart right in front of our eyes.

*  *  *

Michael Snyder is a Republican candidate for Congress in Idaho’s First Congressional District, and you can learn how you can get involved in the campaign on his official website. His new book entitled “Living A Life That Really Matters” is available in paperback and for the Kindle on Amazon.com.

America"s New "Trick" To Beat Black Friday Crowds: Wear Employee Uniforms

US shoppers’ lust for Black Friday bargains this year has reached absurd new levels, evidenced by a viral joke that morphed into a disturbing new trend to help shoppers beat Wal-Mart and other big box store crowds by disguising themselves as temporary holiday employees. It started when Twitter user @OverlyLiked announcing he would be selling his Walmart vest for $100.

“I’m selling this Walmart vest for $100,” he wrote. “Use it to skip the line during Black Friday. You can even walk in, grab what you want, and walk out."

I’m selling this Walmart vest for $100. Use it to skip the line during Black Friday. You can even walk in, grab what you want, and walk out????????‍??. pic.twitter.com/Q0UyDHUeU0

— 6"4 (@OverlyLiked) November 20, 2017

Although the tweet was reportedly meant as a joke, earning @OverlyLiked more than 30,000 retweets and almost 80,000 likes, it wasn’t long before he was being inundated with real requests to buy his shirt.

“The popularity of the tweet really did not surprise me… What shocked me was the news coverage of that,” @OverlyLiked told RT, explaining that apart from the bidders, he was also sought out by numerous media outlets covering the story.

Lol people really been trying to buy the Walmart vest. It was a joke i don’t even own a Walmart vest. pic.twitter.com/WFnhEAaNWZ

— 6"4 (@OverlyLiked) November 21, 2017

But @OverlyLiked’s disappointed would-be buyers didn’t need to wait long for other offers to materialize. It seems former and current Wal-Mart employees quickly caught on to the idea and began selling their own uniforms in earnest...

Going out for Black Friday?

Pick up this Walmart vest for $30!

Might be able to cut some lines. https://t.co/8P9MR1SPwz pic.twitter.com/vEsghCDX0K

— Fat Kid Deals (@FatKidDeals) November 21, 2017

Now I know them Walmart vest seemed like a good deal ,but I got these Best Buy joints going for $110 walk right in , skip the line , and take whatever you want !! pic.twitter.com/eVzML3RYbQ

— Teezy (@Jayteeezyyy) November 22, 2017

 

Walmart vest for sale ??80 dollars ..Walk right in ;Get what u want and walk right out on Black Friday ????????‍?? I"m willing to negotiate #FirstComeFirstServe pic.twitter.com/An9yHp275b

— benneth (@KennethRaw) November 20, 2017

 

While others went out looking for them,

If anyone works or has worked at Walmart and has an employee vest..please let me buy it. I’m tryna test something out black Friday.

— scythe (@FuckDae) November 22, 2017

Meanwhile, Walmart has apparently caught on to the hustle, and has asked its employees to “question” anyone they see wearing one of their vests, but whom they do not recognize.

this spread so fast that at the manager meeting today we were told that if we see anyone we don’t recognize on thursday/black friday wearing a walmart vest, to question them. ???????????????? https://t.co/IEA9CTFrkQ

— Emily Gould (@emg_emily) November 21, 2017

The American “Black Friday” tradition has intensified in recent years as big-box stores have sought to fend off the encroaching “Cyber Monday” when shoppers order all their items online - read Amazon - instead of trudging through massive crowds at Wal-Mart, Best Buy or any other retail mecca. Retailers typically open late Thursday evening, before the holiday has even ended, to offer massive bargains, prompting nationwide anarchy as dozens of stories and videos emerge of shoppers fighting one another for the cheapest deals on anything from blenders to widescreen TV’s to underwear. The insanity of Black Friday was perhaps encapsulated best by this meme that made the rounds a few years back:

 

One Person Shot Outside Mall, Brawl Closes Alabama Shopping Center As Black Friday Gets Going

A day after giving thanks, it appears the gentle folk of Missouri and Alabama are more about taking this morning...

One person was shot outside a Missouri mall as swarms of shoppers looking for Black Friday deals saw chaos pop up throughout the country.

As ABC17 reports, a 19-year-old person sustained life-threatening injuries after the shooting in the parking lot of the mall.

Mall policy stipulates no firearms are allowed inside of the building, but it"s unclear if that applies to the parking lot as well.

Officers said they could not confirm whether the shooting was accidental or deliberate.

Additionally,NY Daily News reports another shopping center in Alabama saw an outbreak of violence Thursday, with brawls shutting down a late-night session early.

Police in Hoover, outside Birmingham, broke up fights at the Riverchase Galleria outside Birmingham, with Al.com reporting that one person was treated for injuries by paramedics.

Social media video that appeared to be from the scene showed officers restraining two women amid scattered clothes and displays, though no information about arrests was immediately available.

Both the malls were closed after these events, but are set to reopen at 6 a.m. on Friday.

Caught On Tape: Chaos, Multiple Fights Break Out Among "Black Friday Zombies"

It’s Black Friday, and in keeping with the Holiday weekend tradition, media commentator Mark Dice traveled to Wal-Marts and other stores to document the “zombie apocalypse” of half-awake consumers hell-bent on elbowing past their peers so they can be sure to get the best deals on electronics, books, video games, clothes and any number of other popular holiday gift items. Of course, as Dice points out, many of the same deals can also be found on a little website called Amazon.com without the hassle of pushing through crowds.

After last year’s disappointing sales totals, retail analysts expect holiday weekend spending to come roaring back this year: According to Fox Business, spending per capita is expected to climb 47% compared with last year’s holiday weekend, up from $505 to $743. An estimated 164 million people are planning to shop or are considering shopping during the Thanksgiving weekend, according to a survey by the National Retail Federation. In a rare, positive piece of news for America"s beleagured retailers, Americans had already spent $1.52 billion, which is a 17% increase from last year. The warm autumn means fashion sellers are looking to offload masses of unsold coats, boots and woollens.

But for everyone who isn’t participating in the retail madness, plenty of videos and images have already emerged on social media of brawls, fistfights and stampedes in the US and around the world as the traditional Black Friday hysteria sets in.

The Riverchase Galleria in Alabama, a group of shoppers shouted and pounded one another with their fists while an unlucky few were trampled.

Meanwhile, a midnight brawl broke out at one California mall as two shoppers brutally pummeled each other.

Of course, the carnage wasn’t limited to the US. One video circulating on Twitter depicted a mass of shoppers swarming a game store in Cape Town, South Africa.

 

Black Friday on Flakka Level. pic.twitter.com/1oBQ9xScLD

— Sandile ???????? (@SirVincent_M) November 24, 2017

 

...and a multiperson brawl erupted outside the Eastgate Shopping Center in Johannesburg.

 

A scuffle breaks out outside The Checkers in the Eastgate Shopping Centre. #BlackFriday @TeamNews24 Plenty of security guards on duty. pic.twitter.com/R6ihJUkCte

— Sharlene Rood (@ssharim) November 24, 2017

 

At another American all, a scuffle broke out over...toilet paper?

 

Scuffle breaks out over toilet paper #BlackFriday: https://t.co/18qK0R7zbi via @YouTube

— Kachi Sam A (@samonyeoo) November 24, 2017

 

One radical feminist protester hijacked Black Friday sales at a Kiev sweet shop by throwing items around topless. The protester identified with the Femen movement, which has staged many similar protests in Russian and Ukraine.
The shop - owned by Roshen - was named after former Ukrainian president Petro Poroshenko, whose family famously owned a chocolate empire, as the Daily Mail pointed out.

 

At a shop in Sao Paulo, Brazil"s biggest city, huge crowds can be seen struggling to get hold of huge Samsung TVs.

In another of the images, a worker climbed a stack of electronics and attempted to marshal the chaos by using a vuvuzela horn. But his efforts failed to stem the swarming crowds.

According to local media reports quoted by the Mail, at least 68% of the Brazilians bought something during Black Friday, a number that compared with the 61% of last year and shows a slow increase of the economy.

Even in Athens, where the shaky Greek economy has only recently returned to growth, shoppers lined up in search of deals. Photos taken show some happy customers carrying away TVs.

 

In the UK, where Black Friday isn’t as chaotic as it is in other parts of the world, shoppers are expected to spend nearly £8 billion this weekend. In New York City, Macy"s Herald Square finally opened its doors at 5pm on Thanksgiving Day for thousands of early Black Friday shoppers in search of amazing sales, door buster deals, and limited-time-offers. Macy"s CEO Jeffrey Gennnette has said that spending so far on Black Friday is already slightly better than it was last year.

But the day is still young, and as the hours pass, we imagine more outrageous stories of brawls, shootings and other shocking behavior will emerge on social media...

...and we"ll be here to chronicle all of it.
 

"I Was Expecting Many More People": Black Friday Tumbles To 3rd Spot In Busiest Shopping Days Of The Year

It has been an odd year for retail: with an estimated 6,000 store closures, and 65,000 fewer retail jobs than at the start of the year, many have said shorting retail, and especially malls, is the next "big short" trade. Indeed, one look at the performance of the mall heavy CMBX 6 BBB- tranche confirms that the bottom has fallen out of the legacy "bricks and mortar" space.

And yet, despite what should be a furious race to the bottom for market share by all still solvent non-Amazon retailers, this has not happened in what appears to be a strange manifestation of rational pricing. In fact, according to Market Track, last year the discounts were 6% deeper than this year across 17 categories in Black Friday circulars, the WSJ reports, and notes that only three of 10 major retailers the firm measured had better prices this year.

This was obvious to potential buyers like Delaney Dauchy, 15, who was shopping with her mother at a mall in Thousand Oaks, Calif., and told the WSJ that the deals aren’t as good this year. She recalled a seven-for-$28 deal on underwear at Victoria’s Secret last year; this year, she said it was five-for-$28. The Dauchys said there were smaller crowds than past years and Black Friday deals have been going on all week. “I’m not sure it seems extra special,” Anne Dauchy, 47, said.

?? Black Friday alert! ?? The 10 toys we"re tracking are cheapest at Target, where they cost $849.80. For more info: https://t.co/BVIi10s1A7 #BlackFriday pic.twitter.com/m4Ki5dnDuH

— WSJShoppingElf (@WSJShoppingElf) November 24, 2017

To be sure, there are still deals to be had: on Friday, retailers dangled the usual promotions, many of which were identical to last year, including 30% off at Coach and 50% off at the Gap. By Thanksgiving Day, shoppers were already taking advantage of the bargains. Kevin Krause, 27, was first in line waiting outside the Kohl’s store in Medford, Ore., Thanksgiving afternoon. The store opened its doors at 5 p.m., but by 3:15 there was already a line forming.

However, as the WSJ confirmed, lines at many other locations were far shorter - if present at all - compared to prior years, such as this Best Buy at the Fair Lakes Shopping Center in Fairfax Country, VA, where there was virtually no excitement opened this years, especially when compared to 2011.

Then (in 2011)...

... and now.

A similar comparison with Macy"s, which the WSJ compares between 2011 and now. The difference is self-explanatory.

Naturally, in light of the smaller bargains, the lack of shopper euphoria is understandable: yet what is surprising is why there aren"t bigger bargains? After all, neither the industry, nor the economy has turned on a dime. Speculating on the reason, the WSJ writes that "even as this year has proved one of the most challenging for retailers, analysts are predicting robust holiday sales, underpinned by rising wages, low unemployment and strong consumer confidence."

What rising wages? Aside from various "soft" surveys, and management expectations, wage growth remains abysmal, and real wage growth has been negative for three months!

What the WSJ probably means is that between near record low personal savings and a surge in credit card usage, Americans are spending like there"s no tomorrow... they are just not spending their own money.

Anyway, the always optimistic National Retail Federation expects sales to increase as much as 4%, to $682 billion in November and December, compared with the same period a year ago, which would make it the strongest season since 2014. The delusion about US households" spending power continued: "I’d be fully expecting people to be thinking about spending more, not be holding back as much as in the past,” said Andrew Duguay, a senior economist at Prevedere, a predictive analytics company.

Spending more of what?  Here is America"s savings rate: unfortunately people don"t have "more" to spend... 

And yet, maybe the NRF is on to something. In an interview with the WSJ earlier this week, Neiman Marcus Group CEO Karen Katz attributed a jump in the luxury retailer’s gross margin in the latest quarter to stronger full-priced sales. “We’ve gotten our inventory in perfect alignment with our sales,” Katz said.

That could change in the days leading up to Christmas. Shoppers have been trained to wait for deals—a practice made easier by online price comparisons. If they hold off on making purchases, retailers will likely slash prices more than planned as the season progresses.

To be sure, the lack of deals now may mean even greater discounts in the coming months:

In a Long Island, N.Y., Wal-Mart Thursday evening, Andre Valadas said it had been hard to snag one of the discounted Sharp TVs being sold at the store or at a Best Buy across the parking lot, but glanced at his phone often to text with friends nearby looking for a similar deal.

 

The 34-year-old software engineer expects prices to fall further. “I hope that if they don’t have deals right now they will have a them in a few weeks closer to Christmas,” Mr. Valadas said.

 

Retailers still have to contend with headwinds that include a shift in consumer spending away from apparel and accessories and toward dining, travel and entertainment, as well as the explosive growth in online sales.

The above is bad news for bricks and mortar retailers, who may have gotten a brief reprieve only to lose even more customers to online alternatives like Amazon.

And speaking of, Adobe Systems said online sales on Thanksgiving increased 17% as of 5 p.m. to $1.52 billion. It also expects online sales to increase 14% to $107.4 billion during the November-December period, compared with the previous year. Amazon said Thanksgiving was one of its biggest mobile shopping days, as orders placed through its app increased 50% over last year. Best selling items included Keurig coffee makers and its Echo speaker devices.

Indeed, no matter what happens to traditional retail, Amazon is likely to be winner. The online retailer, whose stock hit another all time high, is expecting a big Black Friday as more shoppers choose to skip the stores.

“If you go back to the creation of Black Friday, it was this amazing opportunity for customers to get great deals,” said Dorion Carroll, vice president of mobile shopping at Amazon, in an interview earlier this week. “So they would flock to the stores and all of that would be great, until it wasn’t. It got too crowded.”

In fact, it may come as a surprise to some, that Black Friday is no longer the busiest shopping day of the year. It ranks No. 3, behind the Saturday before Christmas and Cyber Monday, according to the consulting firm Customer Growth Partners.

Several dozen people still gathered in line early Friday morning to be the first inside a Target store in Houston when it opened at 6 a.m., though some said the crowds were notably smaller than years past. Once inside, shoppers like Freddy Cespedes, 42, owner of a small security company, found the best advertised stuff was already picked over the night before.

“I was expecting a lot more people,” said the Black Friday novice though he acknowledged he, like many people nowadays, primarily shops online.

Dying Malls Increasingly Rely On Taxpayer Handouts For Survival

America"s dying malls have been a frequent topic of discussion of late as these relics of the 80"s have been forced to convert once valuable high-end retail square footage into grocery stores, libraries and doctor offices just to keep the lights on.  Here"s just a small sampling of the recent carnage:

• A Third Of All Shopping Malls Are Projected To Close As "Space Available" Signs Go Up All Over America


• America"s Desperate Mall Owners Turn To Grocers, Doctors & High Schools To Fill Empty Space


• Failing Malls Turn Empty Parking Lots Into Carnivals To Generate Cash

But, as Bloomberg points out today, one other funding source is increasingly emerging as a key financial sponsor in the efforts of commercial REITs to re-purpose their failing assets: taxpayers.

In Brookfield, Wisconsin, for example, the city is using tax-increment financing (TIF), a common tool for municipalities to subsidize development by putting property taxes from new projects into a fund that pays for building cost, to help rebuild the Brookfield Square Mall. Meanwhile, as if that weren"t enough, the city has also agreed to pay for remediation costs related an old Sears auto repair shop and to build a new convention center and hotel where the Sears once stood.

In this depressing landscape, there is at least one player still willing to take the risk: local governments hungry for tax revenues. Developers incorporating additions such as housing and parks in their plans are turning to public partners to help rehabilitate the aging retail meccas that dot the U.S. Public subsidies have been part of retail development for decades, but with landlords pouring billions of dollars into renovation to battle a wave of store closures, public-private partnerships are more urgent, and more fraught, than ever.

 

At the Brookfield Square mall in Wisconsin, the landlord, CBL & Associates Properties Inc., needed a new occupant for a fading Sears. CBL had been tinkering with the mix for the past few years. Earlier, in 2008, it completed a 20,000-square-foot expansion, adding grocery stores and restaurants and renovating the interior.

 

In the end, it found its tenant: the city of Brookfield.

 

The local government plans to step in to build a conference center and hotel. By creating a hub for small and medium-size conventions on 9 of the 29 acres currently occupied by Sears, the city hopes to boost CBL’s efforts to reinvent the property, the largest taxpayer in Waukesha County. The idea is a greater focus on entertainment, recreation and business, according to Daniel Ertl, director of community development for the city of about 38,000.

 

“The Sears store is really a shadow of what it used to be,” Ertl said. “We encourage CBL to continue to reinvent themselves. God knows where retail is going to be in 20 years.”

As Bayer Properties CFO, Jami Wadkins, who just secured all sorts of taxpayer-funded handouts to rebuild a failed mall in Alabama, points out, public funding is becoming an "important element of the capital stack of every developer."

These expansive developments often secure additional public financing through various forms of tax arrangements and incentives, as well as infrastructure spending for things like parking garages. Such funding has become an important element of the capital stack for every developer, according to Jami Wadkins, chief financial officer of Bayer Properties, a real estate company that develops and manages retail real estate.

 

In Birmingham, Alabama, Bayer worked with the city government to transform the site of the Pizitz, a historic department store that closed in 1987. The Pizitz, which Bayer bought as a vacant building in 2000, was in a rundown neighborhood that lagged behind the revival occurring in other areas of downtown.

 

Numerous plans ended up on the scrap heap before federal and state aid was secured to build a mixed-use community, which opened in 2016. The development houses 143 residential units -- now 90 percent occupied -- a co-working space, a food hall and retailers, including Alabama’s first Warby Parker.

 

The project cost was $70 million, including public and private funds. Bayer was able to obtain a low-interest loan from the U.S. Department of Energy, as well as tax credits from the state. The city paid to refurbish the landscaping in the area, including the sidewalks and street lamps, according to Wadkins.

 

“If you can put a plan together for a city that doesn’t put the city at great risk, then they will invest with you,” Wadkins said. 

To conclude, perhaps no one summarized this lunacy better than Ronald Reagan who succinctly described the Government"s approach to economic affairs as follows:

"Government"s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it."

Malls are clearly now in the "subsidize it" phase of the Government"s economic plan.

Caught On Video: This Is All That"s Left Of Sears Canada

On October 11, we reported that the now defunct Sears Canada announced plans to liquidate its remaining 150 stores instead of restructuring, the latest admission of brick and mortar defeat in the war with Amazon, with the result some 12,000 job losses in the coming weeks. The Canadian version of Sears is the latest victim of department-store decline that’s swept North America as shoppers gravitate online. While the retailer has dabbled in pop-up stores and e-commerce, its distribution centers aren’t as automated as Amazon.com Inc. or even Canadian peer Hudson’s Bay Co., which last year opened its own robotic facility to accelerate online orders.

For thousands of soon to be unemployed Sears Canada workers and retirees the future of their pensions remains in limbo: Sears Canada has 18,000 retirees and beneficiaries whose monthly pensions its has to address. A motion was filed in August for a windup of the plan, which would require the company to pay the full C$266.8 million deficit, according to the filing. That motion has been postponed until at least Nov. 30.

There is also the question of what happens to all the local malls that suddenly find themselves without 150 anchor tennants. The Sears bankruptcy comes two years after Target"s liquidation left a hole in many of the country’s malls, which made it tougher for Sears Canada to find buyers for its real estate and leases.

What there is zero confusion about however, is what happens to liquidating stores once their employees - aware their termination is imminent - lose all interest in even pretending to keep up an appearance of normalcy.

The answer is shown in the following video from Vtography, which was taken in the Fairview Mall in Toronto on October 22, 2017, and which captures the chaos from a liquidation sale at, well, liquidating Sears Canada. All that"s missing from the post-apocalyptic scenes are the zombies.

Vending Machines Are The Latest Threat To US Retailers

US retailers just can’t catch a break.

In a bid to undercut US-based brands, “fast fashion” purveyor Uniqlo announced this week that it will begin selling its clothes in vending machines, a common practice in Japan, where Uniqlo’s owner, Fast Retailing Co., is based. All told, the company plans to open 10 machines in and around New York City, Oakland and Houston, according to MarketWatch’s Ali Malito, who reported that brands are increasingly selling consumer goods like clothing out of vending machines as part of a “growing trend” as they “look for new ways to sell their goods" amid a flood of brick-and-mortar bankruptcies.

“There’s no hassle,” consumer shopping expert Andrea Woroch told Malito. “You get what you want.”

However, this latest wave of innovation in the retail space threatens to leave US firms flat-footed if the fail to quickly adapt, just like many now-dead companies who failed to anticipate the rise of Amazon.com and e-commerce more broadly.

In the US, vending machines are a $7 billion-a-year business, although sales have been flat in recent years, according to industry-research group IBISWorld, as consumers increasingly prefer healthier snacks and beverages than the potato chips and soda that consumers typically associate with vending-machine sales. According to Euromonitor data cited by MarketWatch, the US vending-machine market is closer to $5 billion a year in sales, the third-largest behind No. 2 Spain ($8 billion) and No. 1 Japan ($26 billion).

In recent years, vending machines have been popping up in the US that sell a range of nontraditional items, including guitar accessories, bike parts, Lego toys, caviar, pet food, umbrellas, socks, shoes, envelopes, cosmetics, gold and even – in the states where it has been legalized – marijuana, according to MarketWatch.

“Food and beverages still make up most vending machine sales — each accounting for roughly one-third of sales — while movies and games made up 29% of the industry, followed by 6% for other products including electronics, magazines, toys, condoms, first-aid products and cosmetics, IBISWorld found. Still, food vending machines no longer just offer Pringles and pretzels. Sprinkles, a bakery in New York, has a “Cupcake ATM” for passersby in the mood for a treat, and another bakery, in Cedar Creek, Texas, has a vending machine for its full-sized pecan pies.”

A “vending machine” for luxury cars opened earlier this year in Singapore. The “machine” is a revamped office building that allows wealthy collectors to pay in cash and drive off in their new car with minimal hassle. Luxury goods brands appear to be seizing on the vending-machine model more quickly than their downmarket peers, as MarketWatch explains…

“Champagne company Moët and Chandon also has vending machines, which hold 320 mini-bottles of its champagne. The first such machine launched in London last year and they are now available in Las Vegas and New Orleans. Companies even sell cars through vending machines - there’s already one in Singapore automotive division of Alibaba Group-owned shopping site Tmall hopes to bring one to China — not to be confused with vending machines in cars, which Uber has introduced in partnership with tech startup Cargo.”

As a gathering wave of brick-and-mortar closures and bankruptcies force brands to innovate, low-cost vending machines are looking increasingly attractive. However, Uniqlo must still find a way to surmount customer-service obstacles like allowing customers to try on clothes before buying, and enabling them to easily return their purchases.

“Because it’s cheaper for companies to sell from a machine instead of paying for rent and employees, Woroch said the variety of machines will keep growing. But they aren’t always the best option for shopping. Using them takes away most of the customer service element, since there’s no one to ask for help in sizing and product information, and no easy way to try or return the item back to the vending machine, Woroch said. And even with online shopping becoming more of a go-to option for consumers, shoppers still want that extra help, which is why so many more companies have chat boxes, she added.”

As we recently reported, retail bankruptcies surged 110% during the first half of 2017, accounting for some $6 billion in debt, even as the overall high-yield default rate tumbled to 1.9% in the same period from 2.2% at the end of June as $4.7 billion of defaulted debt, mostly in the energy sector, rolled out of the default universe. Overall high-yield default rate tumbled to 1.9% in the same period from 2.2% at the end of June as $4.7 billion of defaulted debt - mostly in the energy sector - rolled out of the default universe.

Mall Tenants Seek Shorter Leases As America's Relics Of The 80's Teeter On The Brink

As if things weren"t bad enough for America"s mall owners, what with the having to filling their retail space with high schools, grocers and churches, it seems that retailers have grown so uncertain about the future of these 1980s relics that they"re only willing to sign 1-2 leases these days.

As Bloomberg points out this morning, leases renewals used to be 5-10 years in length but are increasingly only being signed with 1-2 year terms.  Meanwhile, thousands of stores are closing each year and it"s only expected to get worse over time.

After more than a dozen bankruptcies this year contributed to thousands of store closures, visibility for the industry is so poor that retailers are pushing for lease renewals as short as a year or two -- down from five to 10 years.

“You’re certainly seeing the renewals geared toward the shorter term, rather than the five-year renewal,” said Andrew Graiser, head of A&G Realty Partners. Retailers are now struggling to figure out how many stores they actually need, he added, and landlords are looking at them “with a much closer eye than they did before.”

Somewhere between 9,000 and 10,000 stores will close in the U.S. this year, said Garrick Brown, vice president of Americas retail research for commercial broker Cushman & Wakefield -- more than twice as many as the 4,000 last year. He sees this figure rising to about 13,000 next year.

“Everyone’s trying to figure out where the bottom of the market’s going to be,” Brown said. He estimates it could occur in 2018 or early 2019.

Not surprisingly, retailers are finding it difficult to sign long-term leases in an environment where 26% of malls around the country are expected to close their doors over the next five years.

Further complicating the lease-length dilemma is the question of which shopping centers will still be around in a decade. Cushman & Wakefield’s Brown sees about 300 of 1,150 U.S. malls shutting down in the next five years.

Perry Mandarino, senior managing director and head of corporate finance at B. Riley & Co., predicts that retail bankruptcies and restructurings will further accelerate in 2018. Some of this will be the result of a long-overdue shakeout of the surfeit of U.S. store space, but the downturn is also compounded by shifts to online shopping and consumers spending on experiences rather than physical stuff, he said.

Meanwhile, landlords are trying to fight back, though it"s a fairly difficult task both arms tied behind their backs.

Landlords “have their backs against the wall, so they’ve been fighting back, hard,” he said. “What you have is a game of chicken up to the end.”

“With all this excess inventory, landlords are trying to do whatever they can to keep malls occupied,” Agran said. “The more empty spaces, the more difficult it is to attract new tenants.”

Frankly, it"s shocking that Abercrombie wouldn"t jump at the opportunity to scoop up some prime square footage in this mall...it already has the Chili"s awning and everything.

Failing Malls Turn Empty Parking Lots Into Carnivals To Generate Cash

It should come as no surprise that America"s malls, the wonderlands of the 80s, are in big trouble.  After slowly losing market share to online competition for years, brick-and-mortar retailers have finally succumb to changing consumer habits which has resulted in a massive surge in bankruptcies and store closings.

Of course, as we"ve pointed out before, mall owners have tried just about everything to fill their empty spaces including the addition of grocery stores, doctors" offices and even high schools. 

But while most mall owners have been trying to figure out how to fill up the inside of their stores, they apparently overlooked another very "valuable" asset:  their empty parking lots.

With customer traffic sagging, U.S. retail landlords are using their sprawling concrete lots to host events such as carnivals, concerts and food-truck festivals. They’re aiming to lure visitors with experiences that can’t be replicated online -- and then get them inside the properties to spend some money.

“Events draw people to come to the shopping center,” said Keith Herkimer, whose company, KevaWorks Inc., is working with big landlords including GGP Inc. and Simon Property Group Inc. to produce outdoor events. “They generate revenue for the owner and offer a chance for cross-promotion, so they can try and drive more customers into the stores.”

The idea, obviously, is to attract customers for experiences that can"t be replicated online with a focus on everything from movies nights to carnivals.

Retail landlords have already made a push toward experience-driven offerings by adding restaurants, movie theaters and activity centers for children. Many malls are also adding rotating stores around for only a short time -- known as pop-up shops -- that are meant to attract young customers who see shopping as an event.

Now, events are reaching beyond the malls themselves. Herkimer’s task is to bring crowds to parking lots with events that generate as much as $60,000 a week for mall owners from the largest outdoor events.

The idea is gaining traction. Next month, Simon Property is having the first carnival in its Round Rock Premium Outlets parking lot, about 20 miles (32 kilometers) north of Austin, Texas. Similar events are being held for the first time at locations such as Central Mall in Port Arthur, Texas, managed by Jones Lang LaSalle Inc., and a Cheyenne, Wyoming, mall owned by CBL & Associates Properties Inc. In July, Simon Property’s Orland Square Mall, southwest of Chicago, will be holding its first parking-lot food-truck festival, with plans for live music performances, Herkimer said.

Meanwhile, REIT investors are finally starting to understand that while carnivals may help to pay the electricity bills of America"s malls they do little to help generate a return on the hundreds of millions of dollars worth of retail square footage that lies empty inside the stores.

At What Age Do You Outgrow IKEA?

By Priceonomics

If you’re a twenty something, it may already have happened: that awkward moment when you realize all your friends have the same Pinsoshen coffee table from IKEA. 

The Swedish brand’s reputation for stocking stylish furniture and selling it for low prices has made it a one-stop shop for cash-strapped students furnishing their first apartments. 

But when do they leave IKEA behind in favor of something more grown-up? We wanted to find out, so we analyzed data from Earnest , a Priceonomics customer. We analyzed a dataset of more than 10,000 anonymous user responses on spending habits. When does it begin? When does it end? And where do people turn when they’re ready for something new? 

We first wanted to know how reliance on IKEA changes over a person’s lifetime, so we calculated the percent of our clients who shopped at IKEA. For the sake of comparison, we did the same for Lowe’s, a home improvement chain with similar overall popularity within our dataset.

As it turns out, age 34 is when you start to outgrow IKEA:

Data source: Earnest

It’s written in the data: you’re more likely to buy from IKEA when you’re 24 than at any other time in your life. IKEA remains popular throughout the late 20s and early 30s, but drops after age 34. We may as well call the 10-year period spanning the mid-20s and mid-30s the “IKEA decade.”

Lowe’s, meanwhile, shows the opposite trend: people are more likely to shop there as they get older. This makes sense, as increasing homeownership means more home improvement projects.

We wanted to further explore where shoppers turn once they grow out of their IKEA interiors. For each of 14 top furniture retailers, we found the age when the most respondents reported shopping at that store. We tabulated those “peak customer ages” below.

Data source:  Earnest

Not only is IKEA popular among young adults, it is the only retailer with a peak customer age below 30. 

People in their 30s are more likely to shop stores that specialize in housewares and home accessories like Bed Bath & Beyond and Williams-Sonoma - perhaps because their IKEA furniture is still serving them well. 

The oldest customers in our dataset prefer to do it themselves, favoring Home Depot and Lowe’s. When buying ready-to-use furniture, they visit big-box retailers like Ashley Furniture.

Beyond age, we were curious about which personal attributes predict furniture retailer preference. We calculated the percent of men and women in our sample claiming to shop each brand.

Data source:  Earnest

By and large, men and women visit the same stores when they go furniture shopping. And they visit IKEA in particularly even numbers. But do-it-yourself stores like Home Depot and Lowe’s are visited by men more often than women, and women visit most of the other stores we considered in greater numbers than men.

Does geographic location influence retailer preference? We next looked at the percent of respondents from each state who identified themselves as IKEA shoppers. Results are listed below for all states for which we had at least 10 respondents.

Data source:  Earnest

The Swedish brand began its North American expansion in the mid-Atlantic states, and this region still has the most IKEA brick-and-mortars. But it doesn’t lay claim to the most shoppers; that distinction goes to the Midwest and West Coast, which are home to the top 8 states.

This ranking is curiously uncorrelated to a listing of IKEA’s store locations. The top 4 states have just one store apiece. The popularity of IKEA in the west may have less to do with store ubiquity and more to do with lifestyle attributes that make the brand a natural fit.