Retail Apocalypse: Falling Down?

Trying to avoid further shattering, wrecking, sinking or falling down the path to the Highway To Hell?

The path to the middle class in retail is often to become a supervisor. There are 1.2 million of them, and their average annual salary is more than twice that of a cashier at $44,000. Does one get the sense that this "Apocalypse" could be leading somewhere with undesirable consequences? 

Below, sadly confirming the 11.5K estimate from Part 3... more than 12,000 stores are expected to close in 2018 — up from roughly 9,000 in 2017, according to Cushman and Wakefield, which just happens to be a long term COMMERCIAL RE services company.

Again, bearing the aforementioned economic cheer-leading narrative and the potential PER CAPITA square footage overcapacity in mind... 

Below, not only the number of closures, but also the square footage closed (105M sf) SHATTERED records, as 550 department stores closed, equating to 43M sf or about half the total.  But it gets better, with YTD 2018 at current pace (77M sf) we are headed to new heights or depths?

With the US consumer tapped out and maxed out, and $1T in retailer debt coming due in the next 3 - 5 years, and rising cost of loan funds threatening to cause many a default and BK, this might spell trouble for commercial RE prices, debt and REITS?

The debt coming due, along with America’s over-stored suburbs and the continued gains of online shopping, has all the makings of a disaster. The spillover will likely flow far and wide across the U.S. economy. There will be displaced low-income workers, shrinking local tax bases and investor losses on stocks, bonds and real estate. If today is considered a retail apocalypse, then what’s coming next could truly be scary.

Can it get any better? But it always does, because it's somehow "different" this time? Right?

An emasculated two legged outsourced economy, retail and service based with little to nothing to fall back on in hard times.  We've been bangin this drum ad nauseum... 

Less spending, less income, less revenues, less latitude for producers to lower prices, less investment in future economic activity, less hiring, lower or stagnated wages, lower production, layoffs ensue, rinse, spin and repeat.  - The "Psycho Social" Aspects of Spending?

Que up... Shattered? The Wreck of The Edmund Fitzgerald? Highway To Hell? Been there done that. 

In closing, que up... the protagonist from Falling Down, William "D-Fens" Foster as the squeezed consumer dancing to... Let the Good Times Roll?  Indeed apropos we think.

 


Suggested reading:

Retail Apocalypse Just Starting
Cushman and Wakefield ICSC Centerbuild Nov 2017
2018 YTD FGRT
2018 Retail Store Closure Square Footage Record - Bloomberg