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Stores Closing at Record Pace as AMAZON Chews Up Retailers...

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Bloomberg 7/4/17

via Drudge

'The battered American retail industry took a few more lumps this week, with stores at both ends of the price spectrum preparing to close their doors.

At the bottom, the seemingly ubiquitous Payless Inc. shoe chain filed for bankruptcy and announced plans to shutter hundreds of locations. Ralph Lauren Corp., meanwhile, said it will close its flagship Fifth Avenue Polo store -- a symbol of old-fashioned luxury that no longer resonates with today’s shoppers.

And the teen-apparel retailer Rue21 Inc. could be the next casualty. The chain, which has about 1,000 stores, is preparing to file for bankruptcy as soon as this month, according to people familiar with the situation. Just a few years ago, it was sold to private equity firm Apax Partners for about a billion dollars.

“It’s an industry that’s still in search for answers,” said Noel Hebert, an analyst at Bloomberg Intelligence. “I don’t know how many malls can reinvent themselves.”

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The rapid descent of so many retailers has left shopping malls with hundreds of slots to fill, and the pain could be just beginning. More than 10 percent of U.S. retail space, or nearly 1 billion square feet, may need to be closed, converted to other uses or renegotiated for lower rent in coming years, according to data provided to Bloomberg by CoStar Group.

The blight also is taking a toll on jobs. According to Labor Department figures released on Friday, retailers cut around 30,000 positions in March. That was about the same total as in February and marked the worst two-month showing since 2009.

Urban Outfitters Chief Executive Officer Richard Hayne didn’t mince words when he sized up the situation last month. Malls added way too many stores in recent years -- and way too many of them sell the same thing: apparel.

“This created a bubble, and like housing, that bubble has now burst,” he said. “We are seeing the results: Doors shuttering and rents retreating. This trend will continue for the foreseeable future and may even accelerate.”

Year-to-date store closings are already outpacing those of 2008, when the last U.S. recession was raging, according to Credit Suisse Group AG analyst Christian Buss. About 2,880 have been announced so far this year, compared with 1,153 for this period of 2016, he said in a report.

New Peak

Extrapolating out to the full year, there could be 8,640 store closings in 2017, Buss said. That would be higher than the 2008 peak of about 6,200.

Retail defaults are contributing to the trend. Payless is closing 400 stores as part of a bankruptcy plan announced on Tuesday. The mammoth chain had roughly 4,000 locations and 22,000 employees -- more than it needs to handle sluggish demand.

HHGregg Inc., Gordmans Stores Inc. and Gander Mountain Co. all entered bankruptcy this year. RadioShack, meanwhile, filed for Chapter 11 for the second time in two years.

Other companies are plowing ahead with store closures outside of bankruptcy court. Sears Holdings Corp., Macy’s Inc. and J.C. Penney Co. are shutting hundreds of locations combined, reeling from an especially punishing slump in the department-store industry.

 

Others are trying to re-emerge as e-commerce brands. Kenneth Cole Productions said in November that it would close almost all of its locations. Bebe Stores Inc., a women’s apparel chain, is planning to take a similar step, people familiar with the situation said last month.

“Today, convenience is sitting at home in your underwear on your phone or iPad,” Buss said. “The types of trips you’ll take to the mall and the number of trips you’ll take are going to be different.”

But even brands moving aggressively online have struggled to match the growth of market leader Amazon.com Inc.

The Seattle-based company accounted for 53 percent of e-commerce sales growth last year, with the rest of the industry sharing the remaining 47 percent, according to EMarketer Inc.'

 

 

Could be an interesting for the UK high st.

 

 

 

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Interesting.

Business/commercial investment opeates of 20 year horizons. You need 20 year period to build and operate a large mall.

20 years ago is about when i first bought something via the internet - Freebsd cds. I got the address, filled in a form and sent a cheque.

These days i can down the cd in about a minute.

The US bought big with the malls concept. Need too with the climate. UK less so. Europe even less so.

UK mall canabilism was noticable in the late 90s when new larger malls put the 80s mall out of business. Youd get a big monster opening - think Soton Westquay or Readings Oracle. Pòof! All the older stores within a 50 mile were whacked.

Now the new malls are being whacked by the interweb.

All retail space outside of prime central spaces is now a good few notches below tertiary. No one wants as even uf rents were free, rates are not.

Office space is hardly more vibrant. Companies are getting smaller and employ less people.

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Maybe it's because I'm a bloke, but I have zero interest in the high street these days. Everything I need I can get online for a better price. The only thing that doesn't work for online shopping is clothing/shoes - it's too much of a gamble. Maybe something like Amazon's Prime service where postage is free and you can send stuff back easily would work for that, but you don't really know whether something looks or fits right until you try it on.

I see the high street just becoming showrooms, carrying a small amount of stock depending on its bulk. The Apple Store is a good example of what things will look like.

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10 minutes ago, Eddie_George said:

Maybe it's because I'm a bloke, but I have zero interest in the high street these days. Everything I need I can get online for a better price. The only thing that doesn't work for online shopping is clothing/shoes - it's too much of a gamble. Maybe something like Amazon's Prime service where postage is free and you can send stuff back easily would work for that, but you don't really know whether something looks or fits right until you try it on.

I see the high street just becoming showrooms, carrying a small amount of stock depending on its bulk. The Apple Store is a good example of what things will look like.

Yep, the few times I have bought non-clothes items on the highstreet in the last couple of years or so, I have gone home and immediately found the same item for cheaper, sometimes significantly so, online. As you say, clothes is better in person. Some of my shoes are size 11, some size 12. In my wardobe I have shirts/jumpers that are M, L, XL & XXL. All of which fit me nicely. Need to be in store to try on for best result.

Edited by SillyBilly

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Amazon is not a company that uses loss leading, Amazon IS loss leading incarnate. It's all about the stock price with a price to earnings ratio of 511

Amazon didn't legally have to pay the US equivalent of VAT for a long time. There are still a few US states where it still doesn't have to.

Only recently has it been made to:   http://sanfrancisco.cbslocal.com/2017/03/30/amazon-collecting-sales-tax-united-states/

Here's a chart of Amazons income / profit vs its revenue / turnover.

20160129_amazon_bi.png

They also have a lot of debt:   http://www.wikinvest.com/stock/Amazon.com_(AMZN)/Data/Long-Term_Debt   the highest of the big companies shown on there.

Here's its share price

amazon-stock-graph.jpg

If profit is to business as oxygen is to humans, then competing against Amazon is like competing against a dead body in a breath holding competition. They will always win.

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12 minutes ago, SillyBilly said:

Yep, the few times I have bought non-clothes items on the highstreet in the last couple of years or so, I have gone home and immediately found the same item for cheaper, sometimes significantly so, online. As you say, clothes is better in person. Some of my shoes are size 11, some size 12. In my wardobe I have shirts/jumpers that are M, L, XL & XXL. All of which fit me nicely. Need to be in store to try on for best result.

Find a quality brand, who eont chop and change manufacturers and you can trust the sizes to remain consistent.

Solovair are good for shoes; dr martens arnt - hauling their production round every p1ss pot country.

Fruit of loom tshirts sweatshirts good; m snd s are not now.

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Just now, spyguy said:

Find a quality brand, who eont chop and change manufacturers and you can trust the sizes to remain consistent.

Solovair are good for shoes; dr martens arnt - hauling their production round every p1ss pot country.

Fruit of loom tshirts sweatshirts good; m snd s are not now.

Not just shoes though, I wear sandals, trainers, running shoes, walking shoes, flip flops...no brand really offers the full range. I just bought speedo swimwear the other day, unlikely to get any other stuff with them!

Same with clothes really, do have my favourite brands where I know my sizes but they couldn't provide my whole wardrobe. Unfortunately my waistline isn't an absolute constant either :D

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11 minutes ago, Arpeggio said:

Amazon is not a company that uses loss leading, Amazon IS loss leading incarnate. It's all about the stock price with a price to earnings ratio of 511

Amazon didn't legally have to pay the US equivalent of VAT for a long time. There are still a few US states where it still doesn't have to.

Only recently has it been made to:   http://sanfrancisco.cbslocal.com/2017/03/30/amazon-collecting-sales-tax-united-states/

Here's a chart of Amazons income / profit vs its revenue / turnover.

20160129_amazon_bi.png

They also have a lot of debt:   http://www.wikinvest.com/stock/Amazon.com_(AMZN)/Data/Long-Term_Debt   the highest of the big companies shown on there.

Here's its share price

amazon-stock-graph.jpg

If profit is to business as oxygen is to humans, then competing against Amazon is like competing against a dead body in a breath holding competition. They will always win.

Oh i know amaxon are funding their business wiyh shareholder equity.

Maybe itll last. Maybe it wont.

It has shifted everyones attitude to shop for more and more online.

30 years ago, manufacturers were running to real estate. Now they are running to web ads.

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They deserve all they get. Almost all major retailers were happy to offshore all their production to essentially child labour and sweatshops whilst ripping everybody off with ridiculous mark ups. 

I would be happy to pay more for well made clothes from good materials made by people who get paid a reasonable wage.

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As above, Amazon is a company running on a mountain of debt, if at some point the interest they have to pay starts rising, then they will have to start charging higher prices. They will probably still be able to undercut the high street because they have no rates to pay and will get discount delivery rates.

Saying that I do find a lot of things are now cheaper on other websites, food on amazon is as much as 4 X the price of specialist online food retailers, and a lot of other items can be found for better prices by looking around. Many of the bigger brands are getting wise and setting up their own online website so they don't have to pay Amazon a cut of every sale.

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So what happens when Amazon and the other big online retailers are the only ones still in business but paying minimal tax? Who pays for public services and if the tax burden is transferred to normal working people and SMEs, then nobody will have any money to buy the things Amazon sells. Our wonderful meritocracy ruled by tax avoiding multinationals and socio/psychopathic greedy landlords.

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39 minutes ago, doomed said:

They deserve all they get. Almost all major retailers were happy to offshore all their production to essentially child labour and sweatshops whilst ripping everybody off with ridiculous mark ups. 

I would be happy to pay more for well made clothes from good materials made by people who get paid a reasonable wage.

Amazon are little different with Ambulances (at the taxpayers expense) waiting outside their ventilated warehouses. http://www.independent.co.uk/news/business/news/amazon-devastating-expose-accuses-internet-retailer-of-oppressive-and-callous-attitude-to-staff-10458159.html

and Neo Nazi guards:   http://www.independent.co.uk/news/world/europe/amazon-used-neo-nazi-guards-to-keep-immigrant-workforce-under-control-in-germany-8495843.html

If not for the publicity those would still happen.

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21 minutes ago, Habeas Domus said:

Saying that I do find a lot of things are now cheaper on other websites, food on amazon is as much as 4 X the price of specialist online food retailers, and a lot of other items can be found for better prices by looking around.

True. Amazon often aren't the cheapest anymore. Jet.com are competing with them too.

23 minutes ago, Habeas Domus said:

Many of the bigger brands are getting wise and setting up their own online website so they don't have to pay Amazon a cut of every sale.

Really? True, but you can't compete with a large distribution network across different stores for exposure. Case in point "Beard Brand" for which Amazon is a small portion of its sales.

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55 minutes ago, doomed said:

They deserve all they get. Almost all major retailers were happy to offshore all their production to essentially child labour and sweatshops whilst ripping everybody off with ridiculous mark ups. 

I would be happy to pay more for well made clothes from good materials made by people who get paid a reasonable wage.

Manufacturers!

Retailers were happy to pay more and more for real estate as it kept new competitors out.

No more so than Tesco, who still have huge undeveloped land holdings.

All backfires when real estate falls and cash flows stops increasing.

 

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There's a lot of retail space and office space empty everywhere.  It's like people don't have any money, and what money there is seems to go straight to the top.

In the local shopping area where I live 20 years ago there was heavy footfall and shops if they did close didn't stay empty for long.  Now shops have remained empty for years, one retailers has recently moved and left a large shop as they've moved to an outlet location and I reckon the vacated store won't be filled for years if ever.

I wouldn't buy clothes online as I like to try them on and feel them before buying.  As I've said on another thread I've found Matalan to offer decent enough quality for me and it's a short trip in the car.  The OH is the same she needs to try clothes on to make sure they fit.

However CD's and other bits I just buy online and have them delivered.  High Street viability needs a drastic rethink as perhaps rates should be linked to actual shop profit rather than a flat rate.

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2 minutes ago, interestrateripoff said:

There's a lot of retail space and office space empty everywhere.  It's like people don't have any money, and what money there is seems to go straight to the top.

In the local shopping area where I live 20 years ago there was heavy footfall and shops if they did close didn't stay empty for long.  Now shops have remained empty for years, one retailers has recently moved and left a large shop as they've moved to an outlet location and I reckon the vacated store won't be filled for years if ever.

I wouldn't buy clothes online as I like to try them on and feel them before buying.  As I've said on another thread I've found Matalan to offer decent enough quality for me and it's a short trip in the car.  The OH is the same she needs to try clothes on to make sure they fit.

However CD's and other bits I just buy online and have them delivered.  High Street viability needs a drastic rethink as perhaps rates should be linked to actual shop profit rather than a flat rate.

Its almost like noone in yhe UK is working...

Shops near me tends to be 3 close, 2 opens.

And id guess the ones opening are are on very low initial rents. The churn of space is huge.

 

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33 minutes ago, interestrateripoff said:

It's like people don't have any money, and what money there is seems to go straight to the top.

Average income has been falling for years, ask yourself why the cheap shops do well, with low sq footage, minimal lines, low staffing selling bottom end products. All the raving about ALDI/LIDL is self-justification all fur no knickers syndrome.

The UK is full of people poncing around on the products of cheap credit who have little if any spare cash in their pockets.

Spend a day at your local petrol station and count how many people (many driving high end german steel) who drive in every day and put a tenners worth in their tank, the cashiers think it is hillarious.

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Listen very carefully. I shall say zis only once: a couple of weeks ago I bought the 'Allo Allo' box set from HMV. Paid £14.99 for it.

On Amazon it's also £14.99 BUT I would have had to pay £3.99 for delivery. And more than likely an attempted delivery at the time when I wouldn't be in.

Seems that the high street stores are raising their game against online retailers.

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44 minutes ago, ChewingGrass said:

Average income has been falling for years, ask yourself why the cheap shops do well, with low sq footage, minimal lines, low staffing selling bottom end products. All the raving about ALDI/LIDL is self-justification all fur no knickers syndrome.

The UK is full of people poncing around on the products of cheap credit who have little if any spare cash in their pockets.

Spend a day at your local petrol station and count how many people (many driving high end german steel) who drive in every day and put a tenners worth in their tank, the cashiers think it is hillarious.

But traveling light improves fuel efficiency, helping to pay for that german rental car.

The UK and much of the global economy is about that monthly payment. Hard to see what the next trick will be to keep the economy afloat.

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Just now, MattW said:

Listen very carefully. I shall say zis only once: a couple of weeks ago I bought the 'Allo Allo' box set from HMV. Paid £14.99 for it.

On Amazon it's also £14.99 BUT I would have had to pay £3.99 for delivery. And more than likely an attempted delivery at the time when I wouldn't be in.

Seems that the high street stores are raising their game against online retailers.

That is fine if you live in or a short walk away from a town centre. For me, to get down to the local shopping centre is £1 in petrol there and back, £2-4 in parking charges and I will likely grab lunch/a drink when I'm out (when in Rome), spending £5-10 in a fast food place or 'Spoons. So delivery charges I don't have a problem with. Never had a problem with receiving deliveries either, I get stuff delivered to work or my parents house (and pick it up whenever I'm visiting). Used Amazon locker too before now. There is usually a simple solution if you are never in (like me) during working hours to getting your stuff.

 

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Age of excess for many.....lots of stuff, requires space to store the stuff, carry less stuff, less responsibility, less to insure,less to worry about, less to find a home for, less stress....more freedom.....less is more.;)

 

 

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There's really nothing to see here. Yep, stores closing and online retailing being the norm. Those working on the high street who lose their jobs then go on benefits - hell, they likely didn't want to be working in the first place so now have the perfect excuse to not work. In steps the government to "help" pay the mortgages of those families affected. The end result is still not a house price crash, as if anybody would be daft enough to believe this in today's world.

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12 minutes ago, Dreamcasting said:

There's really nothing to see here. Yep, stores closing and online retailing being the norm. Those working on the high street who lose their jobs then go on benefits - hell, they likely didn't want to be working in the first place so now have the perfect excuse to not work. In steps the government to "help" pay the mortgages of those families affected. The end result is still not a house price crash, as if anybody would be daft enough to believe this in today's world.

Yes, stores open and close all of the time, its called evolution, times change....but anyone can only live in one house at a time, sleep in one bed at a time and sit on one chair at a time......who cares what the rich spend, they can buy and sell to each other, eating steak or caviar every night is boring, spending money, lots of it does not make for happiness nor contentment, especially if the haves expect to enrich their wealth from the income of the have nots....very wishful thinking, the poor can help support and stand up for each other just as well as the rich can.;)

 

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3 hours ago, Dreamcasting said:

There's really nothing to see here. Yep, stores closing and online retailing being the norm. Those working on the high street who lose their jobs then go on benefits - hell, they likely didn't want to be working in the first place so now have the perfect excuse to not work. In steps the government to "help" pay the mortgages of those families affected. The end result is still not a house price crash, as if anybody would be daft enough to believe this in today's world.

Ukgov dont pay mortgages.

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