
America’s ‘Retail Apocalypse’ Is Really Just Beginning - pratap103
https://www.bloomberg.com/graphics/2017-retail-debt/
======
pascalxus
Malls hold no interest for me whatsoever. There's nothing there worthwhile,
other than employment. Malls have nothing: no libraries, no Good Cafes, no
places to hang out, no parks, no museums, no zoos, limited live music, no
outdoors. And the few things it does have: like some book stores and places to
eat, are all engineered to get you in and out and back to the Mall's singular
focus: Spend, spend, spend: shop till you drop mentality.

However, I do feel bad for the people that will lose their jobs over it.

Let's make towns have downtowns, with beautiful brick roads, scenic ponds with
some ducks, perhaps a waterfall, some nice cafes, a lawn with benches, some
parks, some nature, trees, live music, a library and museums. It's okay to
have some retails stores sprinkled around here and there, as long as they're
original, and not those mass market plastic selling behemoaths we see
everywhere.

~~~
cwbrandsma
I'm not disagreeing completely, but your location might be influencing your
answer. I live in the northern portion of the USA, we get freezing winters and
blistering summers. Come mid-winter...I am not going downtown to walk around
outside, we don't hang out outside (unless we are talking winter sports, and
then FULLY clothed). In summer, there needs to be shade. Fall and spring, we
get wet.

But really, it seems like you want a town with more parks.

~~~
jogjayr
Completely agree that weather makes a huge difference to how much you enjoy
strolling outdoors over being in a mall.

My main complaint about malls is how _loud_ they are: visually and auditory-ly
(someone please tell me what the right word is). Malls are crowded, adorned in
bright, garish colors, filled with stale food court food smells. There is very
little seating other than at food courts, water fountains are hidden far away
in some corner, loud music plays almost all the time, or it's noisy because of
all the people. In sunny Silicon Valley, parking is a nightmare but there'll
only be one bike stand hidden in a 50 acre space. It somehow has all of the
worst features of a busy bazaar with almost none of the good (local products,
"authentic"-ness, ability to haggle etc). Just standing in a shopping mall
stresses me out.

It's possible that the present state of the art of mall design ticks the boxes
for the largest audience possible and I'm the weirdo.

~~~
taway_1212
I think it's just that the things you want don't translate into a good return
on investment for the owners and so they don't get implemented. (i.e.
customers would like them, but it would not translate into a increase in
shopping large enough to actually justify the investment from the owner's
point of view).

My wider (and a bit tangential/ranty) theory is that the most tacky, tasteless
and lacking self-control customers are actually the most profitable, hence
businesses generally tend to pander to them. It's just much easier to extract
unreasonable amounts of money from someone who's unreasonable (an adult child
basically) than from someone sensible and reasonable, so for example us
techies are not the target for a lot of companies.

~~~
tspike
There's no way the returns on investing in making the mall a pleasurable place
to hang out in the short term outweigh the costs, but if people depended on
malls as part of their area's social fabric, I doubt they would be facing this
kind of longer-term decline.

~~~
replicatorblog
This really depends on which mall you go to. The Mall of America is not far
off of Disney's Epcot center in terms of the amenities it provides. The
Galleria in Houston is almost a city unto itself. I remember seeing a bridal
party walking through it once, I'm guessing there was a chapel or function
hall inside. A typical mall in Tampa, Florida, or Salem, NH has less charm,
but those areas aren't working from a high base to begin with.

In dense urban areas, malls tend towards the high end and can be quite nice.
The Shops at Copley Place in Boston is fairly high end in terms of shops and
the architecture is nice. The Westfield in SF is nice in my recollection.

~~~
collinmanderson
Yup. Mall of America literally has a zoo (Sea Life Minnesota Aquarium) and an
indoor amusement park.

------
brudgers
Walmart and Target are mentioned in the article and described as having more
space than they need. Much of this is driven by improvements to logistical
infrastructure over the past three decades and an increased understanding of
what to do with customer/supplier/inventory data and improved capability when
it comes to doing it. The recession provided them with the opportunity to
remerchandise their stores from depicting abundance to depicting scarcity...it
was always the case that Walmart might not have a particular item in stock,
now the shelf is sparse rather than filled with one of ten other similar items
that are older.

But in the US retail has been overbuilt for decades because the tax incentive
of passive loss fueled construction until the Tax Reform Act of 1986. It
helped precipitate the S&L crisis. Low interest rates helped overbuilding
recover by making real-estate development more attractive and creating higher
relative returns from real-estate investment.

The politics of lower taxes over the past forty years has made local
governments more dependent on sales tax for funding. Because sales tax
increases tend to be more politically palatable due to their regressive
nature, local governments tend to be very much in love with retail. The love
manifests itself as ready approval of new retail development and an even
greater aversion to downzoning existing obsolescent retail parcels and
broadzoning existing retail zoning districts.

------
mschuster91
> The root cause is that many of these long-standing chains are overloaded
> with debt—often from leveraged buyouts led by private equity firms. There
> are billions in borrowings on the balance sheets of troubled retailers, and
> sustaining that load is only going to become harder—even for healthy chains.

Oooh, I am so happy if this really happens. The entire financial industry that
makes "profits" from loading purchased companies up with debt and then leaving
them to die needs to burn in a fire.

The strategy certainly works in the short term (and nets impressive "profits"
for the owners/shareholders of such holdings), but in the long term... let's
just hope no one will ever be able to pull through this kind of "deal" again.

~~~
lurker456
The ones who organize these deals have already taken the money and are long
gone. The ones holding the bag after it collapses are the employees, suppliers
and institutional investors.

~~~
mschuster91
Of course - what happened, happened. But when banks recognize that it is not
in their interest to give loans to holdings to purchase companies in order to
get loans on them simply because eventually when the loans on the companies
default the banks are on the hook again, they will not loan them money any
more.

That's the inherent beauty of interconnected and sold loans - no one will be
left spared when they eventually default.

------
ewheeler
The 'Retail jobs growth by state' chart in this article (approx 2/3 down the
page) is lovely: one square line chart for each US state, positioned roughly
according to geography, all equal in size.

I find it very easy to grok compared to choropleth maps and similar charts
that attempt to stay true to geography.

Unlike other non-map presentations of US state data, this layout preserves
ability to spot regional similarities visually.

Is there a name for this kind of chart layout?

~~~
cbhl
I felt like this chart shows that retail store closures are a lagging
indicator for employment. Stores are up in NY, WA, TX -- all states where
people migrate to to work in tech companies. (Not sure about ND and UT,
though.)

~~~
barake
The charts are over a decade, wouldn’t be surprising if North Dakota could be
explained by the oil boom that happened there. No idea about Utah...

------
phirschybar
Full disclosure: I am the co-founder and lead developer at
[https://www.locally.com](https://www.locally.com). We do exactly what I
describe below and we're seeing great results. People want to buy from their
local stores. They just need the modern paths to purchase: BOPIS (buy online
pick up in store), local delivery, and the knowledge oh what is in stock
nearby.

IMHO, the real path forward for retail is to get their in-stock goods in front
of online shoppers via their brands' web sites, their own web site and local
marketplace sites. Ecommerce is not the solution because nobody can expect to
compete with Amazon.

Brands are learning the hard way that they cannot go D2C (direct to consumer),
nor make a profit off selling on Amazon. They HAVE to support their network of
retailers: small and large.

Yes, the day of reckoning for retail is coming. But it won't be an apocalypse.
90+% of retail transactions still occur in a brick and mortar store and people
love to shop. Most retailers (and brands) just don't have the data and tools
(yet) to drive traffic to stores. They're still figuring out the Amazon
problem.

We're getting there though.

~~~
_rpd
> People want to buy from their local stores.

Why? I love my local baker, but for brand name items, I'm going to order
online.

> BOPIS (buy online pick up in store)

Why is this attractive to anyone? If I am making the effort to fight traffic
and parking to visit a physical location, I want to handle the item. "BOPIS"
seems like the worst of all worlds to me.

> knowledge of what is in stock nearby

This is crucial. This is the main reason I no longer visit physical stores.
They likely don't have the item I want in stock. It's just an exercise in pure
frustration. I don't want to be cross-sold or up-sold, and I certainly don't
need someone to order an item that will require a return visit in 2-4 weeks.

> local delivery

Maybe if it is same day, otherwise why do people care?

~~~
phirschybar
> Why? I love my local baker, but for brand name items, I'm going to order
> online.

really? even for things like bikes, sporting goods, clothes, running shoes,
... I could go on. And the thing is: you'd still be ordering online, just not
from amazon. if you order directly from brands and the brand can inform you
that there is a local shop that has it within miles, why not get it there? why
waste the resources of having to have it shipped (long distance) only to
potentially have to ship it back?

> BOPIS

same day delivery beats BOPIS but it is a solid option when there is limited
stock. you are putting on hold. best buy and home depot are killing with this
right now.

> knowledge of what is in stock nearby

yep.

> delivery

agreed.

~~~
_rpd
> > Why? I love my local baker, but for brand name items, I'm going to order
> online.

> really? even for things like bikes, sporting goods, clothes, running shoes,
> ... I could go on.

I have personally ordered all of these online, although there are some types
of clothes that I don't like ordering online.

> And the thing is: you'd still be ordering online, just not from amazon. if
> you order directly from brands and the brand can inform you that there is a
> local shop that has it within miles, why not get it there?

Because I have to schedule a trip to the location. To me, this is like asking:
"why not travel to the post office to pick up your mail?" Well, because
instead the item can be delivered to my door step.

> why waste the resources of having to have it shipped (long distance) only to
> potentially have to ship it back?

In both cases, the item is traveling the same distance from manufacturer to my
door step. It is more efficient to ship the item from the warehouse directly
to my door step vs. first shipping it to some random location miles from my
door step. The only difference is whose resources are used to ship the item
the last few miles: my vehicle or a UPS truck. I guarantee the UPS truck is
dozens of times more efficient.

With Amazon Prime (90 million US subscribers) shipping and most returns are
free, so I'm paying twice if I use my vehicle to pick something up from a
store. The current Amazon return process (explicitly to take this argument off
the table): box arrives at door step, open box, try out item, take out
preprinted return sticker, put return sticker on box, put box on door step,
let Amazon know to pick it up. It is no effort. This is rare enough that the
efficiency impact is minimal, although possibly less rare for clothes. The
situation may change if returns become full fare.

> BOPIS ... is a solid option when there is limited stock

This is a super rare situation for me, but I agree that BOPIS is superior in
this situation.

> best buy and home depot are killing with this right now

I'm quite surprised by this, is there a good article about this around?

~~~
phirschybar
here is one:
[https://www.forbes.com/sites/gregpetro/2016/10/13/opportunit...](https://www.forbes.com/sites/gregpetro/2016/10/13/opportunity-
meets-preparation-how-the-home-depot-became-amazon-proof-using-data-and-
analytics/#3bf4bf471fef)

------
samsolomon
I live near Lenox Mall and Phipps Plaza in Atlanta, and they could not be any
busier. It's packed at 2pm on a Tuesday when I'm going to an eye doctor
appointment. On the weekends there are often traffic issues in from people
entering and leaving.

I feel like it's not that malls or retailers are dying, but instead all the
revenue is going to a few places with wealthy, urban locations. Perhaps this
has to do with the influx of people moving from the suburbs into cities?

~~~
StevePerkins
#1: Buckhead is an affluent residential neighborhood, that turned into a
startup hub and investment banker district in a couple of decades... but
hasn't changed the "residential neighborhood" infrastructure. There are 24/7
traffic issues even when Lenox is closed.

#2: The Atlanta metro had about two-dozen thriving malls a couple of decades
ago. Today there's, what? Lenox/Phipps, Perimeter, _maybe_ Cumberland (?).
Mall of Georgia way out in the boondocks, having killed all the others along
the I-85 corridor? Even Lenox isn't as hopping today as it was in the "old
Buckhead" (i.e. pre-Ray Lewis) days. The trend is pretty stark.

~~~
southphillyman
Just curious ...what are the "pre Ray Lewis" days? He never played in Atlanta
and isn't from there....

~~~
StevePerkins
Throughout the 1990's, Buckhead had a TREMENDOUS club/nightlife scene.

In 2000, Ray Lewis was in town for an away game or whatever reason. He and his
entourage got into a nightclub altercation that lead to a stabbing death...
you know, just read his Wikipedia entry if you're not already aware of those
details.

Anyway, it was an EXTREMELY high-profile story in the local press, and shortly
thereafter the bar and nightclub scene was drastically curtailed.

Now, it's definitely arguable whether this should be attributed to Ray Lewis.
The truth is more complex... political pressure from wealthy local residents
had been building for years, and the Lewis incident was really just a
"symbolic" tipping point. Regardless, a lot us lifelong Atlanta residents tend
to remember that incident as one of those miniature 9/11-ish moments where a
culture shifts abruptly.

~~~
southphillyman
Oh wow thanks, this whole time I thought that incident occurred in South
Beach. Makes sense. I'm sad I'll never get to experience the "old Atlanta". I
usually hear people describe it as pre and post Freaknik though.

------
hprotagonist
in general, it is difficult for me to separate a reasonable concern borne of
the knowledge that a thriving economy is important from a sense that, so far,
the big retail chains that are closing many locations sell junk that i both do
not want and think is largely superfluous anyway.

Anyone got a reasonable way to synthesize those competing thoughts?

~~~
munificent
I think the America that will result from this die-off is a better place. Less
suburban sprawl. Less giant eyesore big-box stores that no one enjoys spending
time in. More informed purchases because people buy stuff online where it's
easier to compare reviews.

But I think there will be significant, very painful collateral damage to
people during this transition and I've very sympathetic to people hit by the
job losses. Retail is one of the few remaining sectors in small towns. Most
other work is becoming increasingly concentrated in big cities or automated
away. The days of the US as a patchwork of thriving small towns is ending, but
many people still live in those towns. Worse, the ones still there are often
there because they are the least able to move — poverty, family commitments,
etc.

The US is rapidly turning into a country that has no place for the unskilled,
but is also failing to provide the education needed to deal with the millions
of unskilled citizens.

I'm also confident that in all of this, it's not the finance industry that's
going to be hurt. They'll pull another "too big to fail" maneuver and we
taxpayers will bail them out, yet again transferring money to the ultra-rich.

~~~
TallGuyShort
>> More informed purchases because people buy stuff online where it's easier
to compare reviews.

I was wondering about this forcing stores to provide more expertise and more
flexible inventory. In my town 2 stores in a specific industry went out of
business 3 years ago and made a big deal in the papers about how too many
people were buying direct from manufacturers instead of visiting their store.
I had been to both stores, asked some questions about products, got dumb
answers and bad attitude, so I went home and bought everything online. In the
last 2 years, 3 new stores in that same industry, 2 of them MASSIVE, have
opened up near by (one of them in the same strip mall), and are doing very
well. The difference? When you walk into these stores the employees know what
they're talking about and they VERY quickly adjust inventory based on current
market trends. Now I make most purchases in one of these 3 stores and not
online - because I can do research better by talking to them and I can get
most things immediately. It's required bigger investment from the owners, but
they have thrived where previous stores failed and blamed e-commerce.

Doesn't work with a lot of commodities, but if you're in retail, I think it's
clear you need to specialize and add value - and that requires more
investment. Don't just be there and expect to keep existing.

~~~
suresk
The risk with this approach is that you become a showroom for Amazon.

I knew a guy who ran a shoe store and provided a high level of personalized
service when selecting the right shoe for your feet, gait, use, etc. Hiring
and training employees who were knowledgeable enough to do that, plus having
to spend a lot more time with each customer, made it a lot more expensive to
sell shoes, and when Amazon and other online retailers started offering shoes
for a lot lower prices (because they didn't have to provide the same level of
personalized service), he eventually went out of business because people would
come into his store and have him help them find the right shoe, then go home
and order it for 20% cheaper or whatever.

If you are a consumer, it seems rational to go somewhere and try something on,
get expert advice about it, etc, then go purchase it wherever it is least
expensive. Why pay 20 or 30% more or whatever for the same thing? Some sort of
unwritten social contract (this is usually the reason I don't use local stores
as showrooms)? Time sensitivity? As a retailer who goes this route, you kind
of have to pin your hopes on those things.

Showrooming is a real problem, and retailers are faced with the decision of
trying to add value and hope people end up buying there even though it costs
more money, or trying to cut costs in every possible way to compete on price,
and I don't know that it's an easy choice all of the time.

------
wmeredith
This is going to be brutal over the coming decade. "The most recent government
statistics show that salespeople and cashiers in the industry total 8
million." Contrast that with 70k coal workers. Imagine the devastation in the
coal belt spreading to suburbs all over mid America.

~~~
drak0n1c
Fair point, but the comparison is a bit uneven - you are comparing one
industry's post-devastation numbers with another's pre-devastation numbers.
Across the rust belt, just a few decades ago, there were many times more coal
workers than 70k. If you go back to 1923 there were 883k.

~~~
tonysdg
So it's one order of magnitude difference compared to two? That's still not
pretty.

~~~
xyzzyz
900k people in 1923 correspond to 2.5-3M people today, if you account for
overall population growth.

------
andrewla
Articles like this are starting to ring little bells for me. There's an
argument that the government's reaction to the 1999 financial crisis (and the
1998 Russian bond crisis, which figures in) is what inflated the housing
bubble [1], which started to show cracks in 2006 and 2007 (with the Bear
Stearns fund collapses) and then went full-bore once things started unwinding
in 2008 as home prices started to fall, and the hugely leveraged positions
started to unwind.

Since the Fed stopped the liquidation of bad assets and refused to allow
pricing to adjust, the question is what new bubble we funneled capital into.
There's a lot of evidence that banks have been reluctant to make loans to
consumers, both because of real risks around modeling of real estate pricing,
and also because of changes in the regulatory regime.

It seems like it's possible that we're starting to see where all the credit
has been going -- rampant investment into retail. The article mostly ignores
restaurants and grocery stores (explicitly so) but we've seen other articles
[2] talking about those sectors starting to show weakness as well.

[1] Not a source that I'd usually cite, but here's Krugman in 2005:
[http://www.nytimes.com/2005/08/29/opinion/greenspan-and-
the-...](http://www.nytimes.com/2005/08/29/opinion/greenspan-and-the-
bubble.html)

[2]
[https://news.ycombinator.com/item?id=15593880](https://news.ycombinator.com/item?id=15593880)

~~~
debacle
> the question is what new bubble we funneled capital into

Overvalued tech unicorns.

------
mjevans
I really hate investment firms that operate entirely on financial trickery
instead of actually sound business activities that increase productivity.

I still think there's a problem with retail, but adding the above seems like
salting the earth you're trying to grow a diverse farm in.

~~~
cptskippy
I agree. These investment firms pickup companies for a song when their stock
prices fall and then basically gut them of any value they possess. They force
the companies to take on massive liabilities that make them unsustainable.
Then they slap on a fresh coat of paint and sell them off to any sucker whose
willing to buy them. They leave these companies circling the drain.

Is this capitalism in it's final form?

~~~
iamcasen
Late stage.

------
sytelus
Retail is the prime example of middleman business. The middleman businesses
don't produce anything by themselves and attempt to extract profits via
information asymmetry and/or some value adds such as geographically closer
availability. Eventually both of these should be done by machines. Throughout
the history technology has been killing off middleman businesses such as
travel agents, insurance agents, stock brokers and so on. Retail is not an
exception and I would expect most middleman businesses to be extinct
eventually.

~~~
narrator
I know all you alpha-nerds just never want to leave the house and could live
in a 20foot square cube and sit on the toilet with your laptop while only
consuming auto-delivered soylent and a caffeine IV drip for all you care, but
let me help you all out with a little in understanding this retail thing:

Retail is mostly about entertainment now, primarily for women. Women like to
shop for clothes and try stuff on. They like to be taken out to restaurants
and movies and go to these with their friends. They like to go see their
personal trainer at the gym. They like to go and get their hair and nails done
and gossip. They send their kids to the math tutor. They send their littler
kid to gymboree. They have a coffee at Starbucks.

If you look at some of the retail REITs and listen to their conference calls,
a lot of stores are going out, but a lot are going in. Things are definitely
changing to be more service and health oriented and the Big Box and Mega Mall
trend is certainly over. The smaller format residential and mixed use stuff is
going to be fine because they are more about services and entertainment as
opposed to merely transactional delivery of mass market goods. People still
want to leave the house and go somewhere.

~~~
lotsofpulp
Fewer people can afford those experiences. There's usually one or two nice
parts of town with (search for Apple store, Nordstroms, or Whole Foods), where
you can find new development.

But buying stuff made in China was cheap, even people who made $30k/year could
do that. But going out for coffee, brunch, movies, massages, trainers, that
stuff is way more expensive, and so is limited to the nicer parts of town.

~~~
narrator
On the low-end there's Dollar Tree (DLTR) and Ross(ROST). Mid-market
Costco(COST) has also been doing well. Prices at Ross are much much lower than
Amazon if your time is cheap or you like shopping. Similarly, grocery delivery
is expensive if your time is cheap.

------
crisdux
I'd imagine this is also partly due to the America's demographic changes and
the aging population. The large baby boomer generation is retiring and
entering a period in their lives where their consumption is lower. Generation
X is smaller and can't keep up the consumption. Generation Y is slowly
entering a consumption phase.

~~~
mac01021
Why is consumption lower after you retire? You've finally got time to spend
all that money that you've been spending all your time earning.

~~~
c0nducktr
Because then people realize how limited their budgets are.

------
bashcoder
The author misses one key point: it’s not only about debt coming due on their
scheduled dates. It’s that much of this debt is also saddled with covenants
that can cause a debt to be collectible at any time if the terms are not met.
Things like a company's loan-to-value ratio, leveraged inventory through high
accounts payable, and other financial metrics. In short, market troubles can
force long-term lines of credit to abruptly come due.

------
butterfi
There's lots of talk here about the changing shopping habits of Americans, but
I think we're glossing over the debt issues. These companies seem to be
burdened with too much debt, which is reflective of how big business manages
itself. I think this has more to do with poor management then changing
shopping habits. People's habits change all the time and it seems management
was asleep at the wheel.

------
Analemma_
Make sure you read the article and don't just come here to comment: there's an
important point that this isn't (just) due to Amazon and overbuilding, but
because a lot of these troubled chains-- even the ones that are still
profitable!-- are loaded up on debt from leveraged private equity buyouts.
Once again, PE accomplishes nothing except stripping healthy companies to sell
their organs.

~~~
frk1206
Am curious how the profitability part is calculated. Seems like annuity
payments or interest/payback on the loan is ignored? If these chains were
profitable after counting in debt, there would be no debt - right?

~~~
dboreham
Yes :
[https://www.investopedia.com/terms/e/ebitda.asp](https://www.investopedia.com/terms/e/ebitda.asp)

I think the GP is saying that absent the LB types extracting the money in the
past, these companies would be profitable even after including interest
payments because they had no business need to take on that debt. It was
incurred solely as a mechanism to turn the company into a debt-machine for the
benefit of the then shareholders. They took a bunch of expected future
earnings, as a lump sum, at that time that turned out to not be real.

------
devereaux
Very nice graphs to illustrate and support the points.

First I like how there is no piechart, but box charts (easier to read). Then
the 2nd path of job recovery in time since 2008 show a more recent divergence
of retail job.

Finally, it is the first time I see how GIS maps can be supplemented by
stacked rectangular graphs for each state where the trend in time is shown. I
spotted something going on in New England on the choropleth, but the graph
nailed it.

Very inspiring to read, especially for the graphs.

------
Phlow
I'm not saying this article is wrong. I do find it interesting that it is
posted just before most retailers post their quarterly earnings reports, while
the sector is already severely battered with huge short volume.

------
Retric
Retail is dependent on consumer spending. As more stores close the remainder
should be more profitable, which should minimize ripple effects.

~~~
irrational
Do you still shop in brick and mortar stores? Other than food (groceries and
restaurants) and sometimes clothing, I haven't shopped in a brick and mortar
store in so long that I can't even remember when was the last time. It's just
so easy to buy things online, even small one off purchases. The other day I
needed some AAA batteries so I just hopped on Amazon and ordered them and they
showed up a day later. I probably could have used Prime Now to get them within
hours if I really needed them right then. That is so much simpler than
traveling to a store and back to pick up anything. I'm really not sure how
most brick and mortar stores will stay in business.

~~~
egypturnash
I still make a ton of brick and mortar purchases. I’m one block away from a
drugstore, where I get things like batteries, bathroom needs, and lighters.
Three blocks away from both Trader Joe's, equally close to the weekly farmer's
market.

But I also live in an actual city instead of an endless sea of suburban
houses.

------
40acres
The common thread I'm sensing is that private equity and leveraged buyouts are
pouring fuel on the retail fire, after reading about the Toys R Us deal it
astonished me how they got raked over the coals by a PE firm.

------
mjevans
Retail jobs are already a dead end and this news doesn't make things any
brighter. The structure of having space that many people go to during the day
with ample parking seems sound enough...

Is there some kind of job that actually needs to be done that wouldn't better
be filled by automation? If not, maybe light automation (local 3D printing and
final assembly) could move to such spaces.

------
PatientTrades
Even with high consumer confidence, retail is dying. The middle class no
longer has the same spending habits as it did for the past 60 years. Its fair
to say that retail malls and outlets as we know them might not exist in the
next 15-20 years. Why would somebody walk into a Macys and buy and item when
you can order it of Amazon and have it delivered the same day for %20 cheaper?

~~~
gozur88
There are still some things you might want to buy in person. Fresh produce,
for example, or clothing. Especially clothing. A lot of people like to try on
clothes before they buy - they want to see how it looks on _them_ , they want
to check out the quality and weight of the fabric. Plus, if you're picky about
color there's no substitute for looking at something in person.

I realize you can effectively do that online by buying a bunch of stuff and
returning what you don't want. But that's more of a hassle than just going to
a brick and mortar retailer.

~~~
paulpauper
but once people know their size and brand they don't need to keep trying it on

~~~
gozur88
Sure, if they buy the same brand. But styles change. Not everyone is like me,
still wearing the same brand (though sadly, not the same size) of jeans I wore
in high school.

------
heurist
Big box chains and suburban shopping malls were doomed to fail. They built in
a boom time and built in places expecting to draw in new development and
residents from tens of miles away. But they based all their site decisions on
an impractical urban development model (suburbs) that turns out to not work in
reality, and they lost their drawing power to online retail. Smaller form-
factor retailers are doing fine because they can easily go where the demand is
and provide better service without making customers feel like cattle. The big
box chains are realizing this and contracting to smaller stores more
conveniently located to try to keep up with the market. They still have a
price advantage and people are willing to walk or drive short distances to
have goods now rather than wait a couple days for their Amazon Prime package.
I hope the massive amount of equity tied up in the failing subsection can be
transferred elsewhere though...

------
javajosh
One strong headwind to this trend is _fraud_. Seller fraud is well-known, and
payment systems have bent over backward to insure this, but _buyer fraud_ is
even more popular these days. It's easy to cheat a seller:

I'd like to see more intimate online shopping experiences involving at least a
short (30s) video call between buyer and seller, at least for first-time
customers. It would be particularly potent to make pleasant greetings, express
joy at the opportunity to shop/serve, show the credit card on the video
monitor, a photo-id, plus incidentals that give a sense for _who you are_.
That way fraud only happens with full-blown identity theft, and now you have a
good image of the thief to help the victim get relief, and you can even add
the thief to a buyer blacklist. (Interestingly the video evidence format helps
avoid the case where a seller blacklists people they "just don't like".)

------
headcanon
The free market in action. Retail outlets are simply not equipped to handle
the tastes of the modern consumer. It is an industry that saw huge growth in
the 80's and 90's and has not been able to keep up with technology. As the
segment of the population that still exclusively shops brick-and-mortar ages,
unless these businesses can evolve and modernize they will continue to fail.
Tough break, but its ultimately better for the consumer. Retail jobs are some
of the worst ones to have too, so as long as the gross job counts are replaced
then good riddance.

There are real problems that brick-and-mortar solve though, mainly having
instant tactile demos of products, like holding an iPhone at the Apple store
or trying on clothes. Future businesses will figure out how to combine the two
approaches into a profitable business model. Trunk club is a good, if
expensive, example.

~~~
duderific
> Retail jobs are some of the worst ones to have too True, but they are also
> some of the only jobs nowadays that are available to people without college
> degrees, or people who have effectively aged out of the white collar or blue
> collar workforce, but still need to generate some sort of income. Notice how
> many retail clerks nowadays are in the 55+ set.

~~~
headcanon
I know, thats why I qualified it with "so as long as the gross job counts are
replaced" Being a millenial, most people I've met in my age group are working
in either retail or food service. Many of them also have 4-year degrees, just
not in a business or technical field. One could say they should have made
better educational decisions, but I would rather live in a world where we can
celebrate the variety of human interests and endeavors, and not subject people
to a lifetime of economic purgatory just because they didn't learn programming
or whatever in school. I'm lucky because I happened to be legitimately
interested in something that is very profitable in today's economy. Others are
not so much, and I really feel for them. But the solution does not lie in
dead-end jobs that give no kind of gainful employment.

------
debacle
Some context - I live in Buffalo, one of the areas in the 10-25% range.

You can't give away commercial space here in Buffalo. Prices are <$1/sq in a
lot of places. A few years ago, ~60% of the commercial space in North Buffalo
was vacant.

Our malls are...problematic. Two have already converted into office space,
with a third being slowly transitioned as it empties (I believe it is empty
now). One of our malls is dying a slow and painful death, even as it is
surrounded by a booming retail space. Our other mall has been designed very
well to be a destination vs an in/out type of location.

But there are still many commercial vacancies. I don't know a lot about
zoning, but many of these locations should really be repurposed to
residential. There's also a large sprawl problem.

Finally, it looks like Niagara Falls was included in that statistic and
Niagara Falls is an absolute shithole.

------
adrianratnapala
Now all of a sudden, I want to go to America just to see how terrible and
horrible the shopping malls are.

I'm from Australia which is full of them (though we call them "shopping
centres"). And they seem very pleasant to me. They are convenient for many
kinds of shopping. I didn't hang out there as a teenager in the '90s, but
others from my school did.

Since then they have become more pleasant for socialising -- though perhaps
more upmarket and less teenager friendly. They have proper restaurants as well
as the old food courts. And my mother's favourite cafe is at a shopping mall
-- and it is reallyp excellent.

~~~
pixl97
In general the malls aren't horrible. Since you are from AUS, the first thing
you'd notice, is there are twice as many stores/sq ft of space per capita.

[https://qzprod.files.wordpress.com/2017/07/marc-
squares.png?...](https://qzprod.files.wordpress.com/2017/07/marc-
squares.png?w=640)

The _big_ problem with this is AUS GDP is about $47k per person. US GDP is
57k. So for only $10,000 more earned per person, we have double the retail
space. This can't possibly work long term. US retail is in bad shape because
of terrible monetary policy.

------
Ologn
For years the Roosevelt Field mall outside of New York City had a rather
crummy food court. The food was mostly junk fast food, the tables were scarce
and tightly packed together.

In more recent times, they redid the food court. It is bigger, with a lot more
room to sit comfortably and relax a while. They have some more upscale dining
choices, organic food, vegetarian food. It makes it more likely that I would
stop and eat there.

I would think the competition from online made them do this. They are in a
good location and didn't have to worry much about bringing in customers
before.

------
IcePenguino
It may be anecdotal, but the local retail malls have put up their holiday
decorations earlier than ever before. Every pole wrapped and bows everywhere.
Feels like they're trying to fight the good fight.

------
kevin_thibedeau
Retail stores don't sell what I want. Their inventory has become too limited.

After the dot com bust/mini recession, most department stores stopped stocking
clothes in my size so I buy much of it online. I frequently try to hold out
and find some electronic item or replacement part in local stores. I almost
always fail and resort to Amazon.

I'm currently looking for a cheap Bissel vacuum that is available on Amazon. I
have yet to see a retailer anywhere carrying that model. Expensive, overpriced
vacuums are all you can get retail these days.

~~~
Spooky23
It’s funny that I work next to a mall and don’t mind shopping in it. Actually
I would prefer it.

Problem is, I’m a gorilla... not skinny enough to be “tall” and not fat enough
to be “big”, and there is not one store out of 250 that sell size 14 shoes, or
a shirt with a size 19 neck that doesn’t look like a parachute, or a 52 long
jacket.

I see it in other areas. If you walk through Lord and Taylor or Macy’s,
there’s a whole floor of petite women’s clothing. I look on the mall and see
lots of bigger, taller or bustier women, all of whom are wearing clothes — but
not from Macy’s!

When you focus on the average consumer exclusively, you miss a lot of people!

------
adameast9000
Im curious as to what the response will be from regulators when these loans
start to mature. I'm assuming none of these companies are 'too big to fail',
and will be allowed to fall apart. That's the big difference between 2008 and
now I think. Will anyone want the assets of Macy's, Kohl's, etc. once
commercial retail collapses? It's going to be a real disaster I think, and
unfortunately the hardest hit will be the poorest Americans once again. Big
winner? Amazon...

~~~
metalliqaz
Republicans will help them get by long enough to become the Democrats'
problem.

------
leebri
Well, you can't beat dollar store prices for quality items directly shipped
from China. Amazon has some real competition on their hands.

------
coldtea
> _In the U.S., retailers announced more than 3,000 store openings in the
> first three quarters of this year._

That sounds like an insignificant number -- you can get as many openings, if
not way more, in a country with 10-50 million population (but less centralized
retail sector, with fewer cross-country chains).

------
free_everybody
I've worked at Kohls and JC Penney, and anyone with half a brain who has
worked in an entrenched retail chain has seen this writing on the wall for
many years. Clothing from these stores are generally out of touch with modern
trends. They can't keep up.

------
zappo2938
Did it show how rural areas compared to urban areas? I only looked at the
visual map quickly and it looks like rural areas are going to hurt the most.
If so this will have great political consequence.

------
m3kw9
Is all about making the experience better to compete with online shopping.
Retail can check out how movie theatres differentiate themselves from the
living room.

------
Feniks
Fuck retail. For decades they have been fleecing customers.

Now I'm no longer forced by stores to buy what they happen to have in their
inventory. Want that obscure JPN VN? Done, delivered next day.

I do feel bad about people losing their jobs. But the discounters and upmarket
stores will always survive.

~~~
wil421
How are online retailers any different? They are “fleecing” customers just as
much. In fact, Jeff Bezos is currently the worlds richest man.

~~~
chronice70
> How are online retailers any different?

I get my esoteric shit tomorrow. That's how they're different. Sorry, but not
everyone is entitled to a job in 2018.

~~~
deadmetheny
>That's how they're different. Sorry, but not everyone is entitled to a job in
2018.

There but for the grace of God go I. I hope karma deals with you accordingly,
should you ever find yourself in dire straits.

------
readhn
It's a prelude to overdue broad market downturn IMO.

------
readhn
this is all coming together nicely with this amazing market bull run from 2009
coming to an end some time in the near future.

timing the event is hard if not impossible.

~~~
paulpauper
not really. All that is happening is that online retail is subsuming offline
retail, while total retail sales keep growing. The bull market has further to
go . long Amazon

~~~
readhn
marker is running out of steam. in a year or two we might be looking at this
as a very significant market top.

------
euroclydon
Please remind me, if I'm ever a loan officer at a bank, to not issue a huge
loan to a traditional retailer that was just taken over in a leveraged buyout
-- jeez!

------
En_gr_Student
So much for "service economy".

------
Danihan
imo this comes down to centralization and the popularity of "big box" stores.
People generally don't want to go to a specialty store anymore, the toy
section at Walmart is fine.

~~~
ninkendo
Interesting thought. I actually hate big stores because I have to walk a huge
distance to find the right section, it’s harder to find the thing I want,
they’re more crowded, they’re more likely to be understaffed (30 checkout
lines with 2 cashiers is very common)... It’s typically a much bigger waste of
time than going to a small store.

But I’m definitely a purposeful shopper: I’m always in and out with one goal
in mind, I never “browse”. Maybe wal-mart and the like are more attractive to
people who just kinda want to browse around and kill time?

~~~
Woofles
For me it's just the fact that if I'm grocery shopping at Target, I can go
look at the menswear department for a few minutes because I also like buying
new clothes. It's much much harder to buy good fitting and good looking
clothes online because you don't get true colors and fit without trying it on.
This is a main reason that many box stores target women more than men, since
statistically women are more interested in clothing than men.

