Source: The Great Recession Blog, by David Haggith
You may not see it yet, but the scale of the retail apocalypse is so massive that it is about to engulf the US economy. As when a flood tide has crept around you on all sides while you were standing on a high spot out on the flats, not paying attention, you can look up now and see it all around you, and it is coming in rapidly. You can now feel the current under your toes.
Since the final quarter of 2015, I have been writing about what I call “the Epocalypse,” by which I mean an economic collapse that will prove to be apocalyptic in scale — something that is both epic (Herculean) in scale and epoch in the literal sense that it will dramatically bring the modern world into a new economic era. I might better, then, call this the “retail epocalypse” because it has insidiously turned into a significant part of that greater event and because it is partly due to e-trade.
While you may have barely begun to see the boarded stores, the numbers now coming in for stores slated for closure and/or bankruptcy in 2017 and 2018 are jaw-dropping, and I’m not using that term lightly.
First, some back story to the retail apocalypse
In case you are just arriving at this blog, let me start with a little recent summary of where I have been going with this staggering development so that you can get a sense of how incredibly fast the momentum of the retail apocalypse (retail collapse) is now building:
While I’ve talked about it for a year or more, in my March, 2017, economic forecast, I particularly described “seven headwinds that will batter the economy.” At the close of that summary, I mentioned how retail was likely to blow up into a major problem this year:
More retail closures are in the works. JC Penny announced last week that it will closeanother 130-140 stores, citing weak demand and online competition. Macy’s recently announced it will be closing 100 stores, too. Macy’s said profit fell another 13%, and it expects a 3% decline in sales in 2017. Kohl’s and Nordstrom are keeping things in line by reducing inventory and cutting back on promotions.
I doubled down on that in May, coming more to the point by calling it a “retail apocalypse,” as a few other writers were starting to do at the same time:
The retail apocalypse grows: Not even halfway through 2017, closures of retail stores have doubled last year’s closures as of this time and already exceed the last peak in closures during the crash of 2008. The bottom line is simple here. Commercial eal-estate investment trusts (REITs), malls, mortgage-backed securities (remember those), and their bankers are in a lot of trouble. The anchor stores are closing up the worst, which will pull others down in the wake by reducing traffic to malls. “Thousands of new doors opened and rents soared. This created a bubble, and like housing, that bubble has now burst.” According to Credit Suisse, 20-25% of US shopping malls will shut down within the next five years.While this is due to a paradigm shift in how people do their shopping, not just an overall reduction in retail sales, it will send shudders and close shutters throughout real-estate-based retail economy, having a huge impact on construction, land sales, banking, jobs, etc.
That was less than two months ago, and now many are calling it a retail apocalypse. If you think we’re exaggerating with colossal words, read on…
The numbers for the retail apocalypse are fully before us, and they are downright frightening
This thing is MASSIVE, ABSOLUTELY AWE-INSPIRING IN SCALE, and I can use those kinds of descriptions and not be exaggerating in the least because this retail meltdown already exceeds anything seen in my lifetime (58 years). There is also nothing Trump or anyone can do that will stop it because the tide has already closed around us — quietly and almost unseen, though in full sight the whole time. These major retail store closures are already scheduled and being implemented now. The boards on the windows start arriving on convoys of semi trucks all across the nation this summer.
Before presenting the numbers that prove the retail apocalypse, I’m going to let Harry Dent give some colorful perspective as to how this calamity is going to end up:
It’s like a scene out of “Resident Evil.”
Sheets of newspaper scratch along the dusty linoleum floor as the wind beats them into the remnants of a bench… or through the open glass door and into the darkened, empty space beyond.
Escalators haven’t run in decades.
The air itself looks dusty.
Could this really be the future of the American mall?
Not unless we have a nuclear apocalypse!
As for this retail apocalypse you’ve been hearing so much about…
Well, it’s bad – yes! – and it’s going to get worse, but I’m writing today to tell you it was totally predictable!
Indeed, it was predictable, and it’s been predicted here for well over a year, but particularly of late as we have closed in on its arrival. The retail apocalypse has moved from the realm of a growing threat and economic predictions to a full-on event that is happening all around us.
Here are the numbers: So far a total of twenty-three-thousand stores (I spelled it out to give you appropriate pause as to the enormity) are already scheduled for closure in 2017 and 2018. Those are numbers that will not be turned back, even if Trump’s plans do make it through congress. The legal work has already been drafted and the plywood for the windows is already being shipped.
Read More Here: Retail Apocalypse Engulfs US Economy – The Great Recession Blog