“I was part of that strange race of people aptly described as spending their lives doing things they detest, to make money they don’t want, to buy things they don’t need, to impress people they don’t like.”Emile Gauvreau

If ever a chart provided unequivocal proof the economic recovery storyline is a fraud, the one below is the smoking gun. November and December retail sales account for 20% to 40% of annual retail sales for most retailers. The number of visits to retail stores has plummeted by 50% since 2010. Please note this was during a supposed economic recovery. Also note consumer spending accounts for 70% of GDP. Also note credit card debt outstanding is 7% lower than its level in 2010 and 16% below its peak in 2008. Retailers like J.C. Penney, Best Buy, Sears, Radio Shack and Barnes & Noble continue to report appalling sales and profit results, along with listings of store closings. Even the heavyweights like Wal-Mart and Target continue to report negative comp store sales. How can the government and mainstream media be reporting an economic recovery when the industry that accounts for 70% of GDP is in free fall? The answer is that 99% of America has not had an economic recovery. Only Bernanke’s 1% owner class have benefited from his QE/ZIRP induced stock market levitation.

Source: WSJ

The entire economic recovery storyline is a sham built upon easy money funneled by the Fed to the Too Big To Trust Wall Street banks so they can use their HFT supercomputers to drive the stock market higher, buy up the millions of homes they foreclosed upon to artificially drive up home prices, and generate profits through rigging commodity, currency, and bond markets, while reducing loan loss reserves because they are free to value their toxic assets at anything they please – compliments of the spineless nerds at the FASB. GDP has been artificially propped up by the Federal government through the magic of EBT cards, SSDI for the depressed and downtrodden, never ending extensions of unemployment benefits, billions in student loans to University of Phoenix prodigies, and subprime auto loans to deadbeats from the Government Motors financing arm – Ally Financial (85% owned by you the taxpayer). The country is being kept afloat on an ocean of debt and delusional belief in the power of central bankers to steer this ship through a sea of icebergs just below the surface.

The absolute collapse in retail visitor counts is the warning siren that this country is about to collide with the reality Americans have run out of time, money, jobs, and illusions. The most amazingly delusional aspect to the chart above is retailers continued to add 44 million square feet in 2013 to the almost 15 billion existing square feet of retail space in the U.S. That is approximately 47 square feet of retail space for every person in America. Retail CEOs are not the brightest bulbs in the sale bin, as exhibited by the CEO of Target and his gross malfeasance in protecting his customers’ personal financial information. Of course, the 44 million square feet added in 2013 is down 85% from the annual increases from 2000 through 2008. The exponential growth model, built upon a never ending flow of consumer credit and an endless supply of cheap fuel, has reached its limit of growth. The titans of Wall Street and their puppets in Washington D.C. have wrung every drop of faux wealth from the dying middle class. There are nothing left but withering carcasses and bleached bones.

The impact of this retail death spiral will be vast and far reaching. A few factoids will help you understand the coming calamity:

  • There are approximately 109,500 shopping centers in the United States ranging in size from the small convenience centers to the large super-regional malls.
  • There are in excess of 1 million retail establishments in the United States occupying 15 billion square feet of space and generating over $4.4 trillion of annual sales. This includes 8,700 department stores, 160,000 clothing & accessory stores, and 8,600 game stores.
  • U.S. shopping-center retail sales total more than $2.26 trillion, accounting for over half of all retail sales.
  • The U.S. shopping-center industry directly employed over 12 million people in 2010 and indirectly generated another 5.6 million jobs in support industries. Collectively, the industry accounted for 12.7% of total U.S. employment.
  • Total retail employment in 2012 totaled 14.9 million, lower than the 15.1 million employed in 2002.
  • For every 100 individuals directly employed at a U.S. regional shopping center, an additional 20 to 30 jobs are supported in the community due to multiplier effects.

The collapse in foot traffic to the 109,500 shopping centers that crisscross our suburban sprawl paradise of plenty is irreversible. No amount of marketing propaganda, 50% off sales, or hot new iGadgets is going to spur a dramatic turnaround. Quarter after quarter there will be more announcements of store closings. Macys just announced the closing of 5 stores and firing of 2,500 retail workers. JC Penney just announced the closing of 33 stores and firing of 2,000 retail workers. Announcements are imminent from Sears, Radio Shack and a slew of other retailers who are beginning to see the writing on the wall. The vacancy rate will be rising in strip malls, power malls and regional malls, with the largest growing sector being ghost malls. Before long it will appear that SPACE AVAILABLE is the fastest growing retailer in America.

The reason this death spiral cannot be reversed is simply a matter of arithmetic and demographics. While arrogant hubristic retail CEOs of public big box mega-retailers added 2.7 billion retail square feet to our already over saturated market, real median household income flat lined. The advancement in retail spending was attributable solely to the $1.1 trillion increase (68%) in consumer debt and the trillion dollars of home equity extracted from castles in the sky, that later crashed down to earth. Once the Wall Street created fraud collapsed and the waves of delusion subsided, retailers have been revealed to be swimming naked. Their relentless expansion, based on exponential growth, cannibalized itself, new store construction ground to a halt, sales and profits have declined, and the inevitable closing of thousands of stores has begun. With real median household income 8% lower than it was in 2008, the collapse in retail traffic is a rational reaction by the impoverished 99%. Americans are using their credit cards to pay their real estate taxes, income taxes, and monthly utilities, since their income is lower, and their living expenses rise relentlessly, thanks to Bernanke and his Fed created inflation.

The media mouthpieces for the establishment gloss over the fact average gasoline prices in 2013 were the second highest in history. The highest average price was in 2012 and the 3rd highest average price was in 2011. These prices are 150% higher than prices in the early 2000’s. This might not matter to the likes of Jamie Dimon and Jon Corzine, but for a middle class family with two parents working and making 7.5% less than they made in 2000, it has a dramatic impact on discretionary income. The fact oil prices have risen from $25 per barrel in 2003 to $100 per barrel today has not only impacted gas prices, but utility costs, food costs, and the price of any product that needs to be transported to your local Wally World. The outrageous rise in tuition prices has been aided and abetted by the Federal government and their doling out of loans so diploma mills like the University of Phoenix can bilk clueless dupes into thinking they are on their way to an exciting new career, while leaving them jobless in their parents’ basement with a loan payment for life.


The laughable jobs recovery touted by Obama, his sycophantic minions, paid off economist shills, and the discredited corporate legacy media can be viewed appropriately in the following two charts, that reveal the false storyline being peddled to the techno-narcissistic iGadget distracted masses. There are 247 million working age Americans between the ages of 18 and 64. Only 145 million of these people are employed. Of these employed, 19 million are working part-time and 9 million are self- employed. Another 20 million are employed by the government, producing nothing and being sustained by the few remaining producers with their tax dollars. The labor participation rate is the lowest it has been since women entered the workforce in large numbers during the 1980’s. We are back to levels seen during the booming Carter years. Those peddling the drivel about retiring Baby Boomers causing the decline in the labor participation rate are either math challenged or willfully ignorant because they are being paid to be so. Once you turn 65 you are no longer counted in the work force. The percentage of those over 55 in the workforce has risen dramatically to an all-time high, as the Me Generation never saved for retirement or saw their retirement savings obliterated in the Wall Street created 2008 financial implosion.

To understand the absolute idiocy of retail CEOs across the land one must parse the employment data back to 2000. In the year 2000 the working age population of the U.S. was 213 million and 136.9 million of them were working, a record level of 64.4% of the population. There were 70 million working age Americans not in the labor force. Fourteen years later the number of working age Americans is 247 million and only 144.6 million are working. The working age population has risen by 16% and the number of employed has risen by only 5.6%. That’s quite a success story. Of course, even though median household income is 7.5% lower than it was in 2000, the government expects you to believe that 22 million Americans voluntarily left the labor force because they no longer needed a job. While the number of employed grew by 5.6% over fourteen years, the number of people who left the workforce grew by 31.1%. Over this same time frame the mega-retailers that dominate the landscape added almost 3 billion square feet of selling space, a 25% increase. A critical thinking individual might wonder how this could possibly end well for the retail genius CEOs in glistening corporate office towers from coast to coast.

This entire materialistic orgy of consumerism has been sustained solely with debt peddled by the Wall Street banking syndicate. The average American consumer met their Waterloo in 2008. Bernanke’s mission was to save bankers, billionaires and politicians. It was not to save the working middle class. You’ve been sacrificed at the altar of the .1%. The 0% interest rates were for Jamie Dimon and Lloyd Blankfein. Your credit card interest rate remained between 13% and 21%. So, while you struggle to pay bills with your declining real income, the Wall Street bankers are again generating record profits and paying themselves record bonuses. Profits are so good, they can afford to pay tens of billions in fines for their criminal acts, and still be left with billions to divvy up among their non-prosecuted criminal executives.

Bernanke and his financial elite owners have been able to rig the markets to give the appearance of normalcy, but they cannot rig the demographic time bomb that will cause the death and destruction of our illusory retail paradigm. Demographics cannot be manipulated or altered by the government or mass media. The best they can do is ignore or lie about the facts. The life cycle of a human being is utterly predictable, along with their habits across time. Those under 25 years old have very little income, therefore they have very little spending. Once a job is attained and income levels rise, spending rises along with the increased income. As the person enters old age their income declines and spending on stuff declines rapidly. The media may be ignoring the fact that annual expenditures drop by 40% for those over 65 years old from the peak spending years of 45 to 54, but it doesn’t change the fact. They also cannot change the fact that 10,000 Americans will turn 65 every day for the next sixteen years. They also can’t change the fact the average Baby Boomer has less than $50,000 saved for retirement and is up to their grey eye brows in debt.

With over 15% of all 25 to 34 year olds living in their parents’ basement and those under 25 saddled with billions in student loan debt, the traditional increase in income and spending is DOA for the millennial generation. The hardest hit demographic on the job front during the 2008 through 2014 ongoing recession has been the 45 to 54 year olds in their peak earning and spending years. Combine these demographic developments and you’ve got a perfect storm for over-built retailers and their egotistical CEOs.

The media continues to peddle the storyline of on-line sales saving the ancient bricks and mortar retailers. Again, the talking head pundits are willfully ignoring basic math. On-line sales account for 6% of total retail sales. If a dying behemoth like JC Penney announces a 20% decline in same store sales and a 20% increase in on-line sales, their total change is still negative 17.6%. And they are still left with 1,100 decaying stores, 100,000 employees, lease payments, debt payments, maintenance costs, utility costs, inventory costs, and pension costs. Their future is so bright they gotta wear a toe tag.

The decades of mal-investment in retail stores was enabled by Greenspan, Bernanke, and their Federal Reserve brethren. Their easy money policies enabled Americans to live far beyond their true means through credit card debt, auto debt, mortgage debt, and home equity debt. This false illusion of wealth and foolish spending led mega-retailers to ignore facts and spread like locusts across the suburban countryside. The debt fueled orgy has run out of steam. All that is left is the largest mountain of debt in human history, a gutted and debt laden former middle class, and thousands of empty stores in future decaying ghost malls haunting the highways and byways of suburbia.

The implications of this long and winding road to ruin are far reaching. Store closings so far have only been a ripple compared to the tsunami coming to right size the industry for a future of declining spending. Over the next five to ten years, tens of thousands of stores will be shuttered. Companies like JC Penney, Sears and Radio Shack will go bankrupt and become historical footnotes. Considering retail employment is lower today than it was in 2002 before the massive retail expansion, the future will see in excess of 1 million retail workers lose their jobs. Bernanke and the Feds have allowed real estate mall owners to roll over non-performing loans and pretend they are generating enough rental income to cover their loan obligations. As more stores go dark, this little game of extend and pretend will come to an end. Real estate developers will be going belly-up and the banking sector will be taking huge losses again. I’m sure the remaining taxpayers will gladly bailout Wall Street again. The facts are not debatable. They can be ignored by the politicians, Ivy League economists, media talking heads, and the willfully ignorant masses, but they do not cease to exist.

“Facts do not cease to exist because they are ignored.”Aldous Huxley

97 thoughts on “THE RETAIL DEATH RATTLE”

  1. Why don’t Kmart Target JCpenny and all the dying retailers open Fed ex or Ups stores inside their big boxes. That way they can save on shipping by having one drop off point for the online orders.

  2. I am truly amazed that the banksters have been able to string this Ponzi scheme into 2014. This really is the largest confidence game ever played, and it’s being done on a worldwide scale.

    But the bigger the Ponzi, the harder it falls. When it falls, it’s going to be epic. What happens during and after the collapse is the $64 trillion question.

  3. Since the tax paying diminishing working class is funding all of the government handouts, what happens when the working folks run out of money, where will the money come from to support the free shit army?

  4. Dammit, Admin, you are scaring shit out of me. Can’t you put up some good news every so often?

    You called this years ago. This is the one area where your batting average is perfect. Thanks for the info.

    If I was smart and brave enough, I bet there would be a way to turn this info into a big pile of moola.

  5. Llpoh says:

    “If I was smart and brave enough,…”

    But you are a ‘brave’ isn’t that the meaning of the word? What are the Atlanta Braves named after?

  6. The solution to this problem is painfully obvious.

    Build more malls. Open more stores.

    I’m betting I get hundreds of calls from headhunters next week.

  7. WinP,

    Brick/Mortor Retail is dying, and Online shopping is making the decline faster. When you fall out of the Middle Class you can only afford your basic needs and none of your wants. You can see and hear it everywhere.

  8. Just a note on Income.

    Household income is generally defined as a combined total of all those working in the household. this can be one person, two, three, four, five or more!

    More people are making minimum wage at an older age and although I cannot prove it, I would guess that it has never been like that before.

    So back to household income – In California I believe minimum wage just jumped up to $9.00 an hour.

    Take $9 an hr. – $360 a week or $18,720 annually. Three people on minimum wage in one household make up the average household income.

    My point is – there are not a lot of people out there making even $30,000 a year!

  9. The retail space owners are humming a different tune: “How I Learned to Stop Worrying and Love the FEMA Camps.”

    (I read recently that Simon Properties had signed a deal with the DHS.)

  10. Jackson:
    I’m a good example of the New American Consumer.
    I thinking of savings first and setting aside money for the future.
    Providing for family – educating children and helping a couple of needy relatives – is high on my list.
    Buying cheaply or used – saving money makes me feel good – I do it more and more often.
    I like eating at home and family entertainment.
    Creating and doing things together beats being entertained by tv or others. It’s more satisfying.
    Store visits and consumer expenses, I eschew.
    I like being self-reliant.

    So the economy suffers. That’s unfortunate but downturns happen and America will recover. More important, don’t you think, is that the USA and her allies continue to dominate the Middle East, Europe, and East Asia. We are containing the terrorist Arab states, Russia, and China. Sure there’s a cost, but remember, WW2 got us out of the Depression. The military will come through for us again. A little sacrifice often pays big dividends. Cut back on your spending, like my friend Jackson, if necessary, and let the leaders you elected put your money to work at home and abroad where it will do the most good.

  11. Irak never fails to deliver. He’s our very own reverse Tokyo Rose.

    As I’ve said before, the food and dairy industry seems to be doing fine; there is a lot of activity going on. I suspect that families under pressure to restrain spending, are buying less shit and if they eat at home rather than at a restaurant, the same stuff gets produced anyway. Take the greek yogurt fad. Chobani started up not all that long ago and last year, they built the largest yogurt plant in the world in Idaho. It’s so big it has 12 200,000 gallon silos for raw milk and the cost is likely more than a billion (which is a helluva lot for a dairy plant). They are even talking about expanding it.

  12. The upside of all this is there are going to be lots of discounts and sales going forward. Save your money and wait for these stores to start falling and load up.
    I went to Kohls and bought winter clothing for next year for some of the Grandkids today, all of it 60- 80% off.


  13. Thanks for a very well-written and informative article, probably the best one on this subject I’ve read in years. And I’ve read some good articles from some knowledgable journalists on the current retail debacle. I also have to say that this article is very witty which makes it entertaining to read w/o trivializing the content. Keep up the good work, we need more talented and honest writers like you to inform the public about what we face.

  14. You state that 6% of sales are from on-line purchases, but is that the percentage within a particular retailer’s sales only? It doesn’t seem like you’ve accounted for pure on-line retailers like Amazon, Vitacost, Zappos and the like. How much of the retailer shortfall has been made up by those firms? I agree with the general trends you’ve described, just not sure about the severity, at least yet. While my purchases overall are down, I have replaced almost all retailer buys with on-line buys. It’s dangerous out there.

    1. tham

      Only 6% of all retail sales in the entire country are done on-line. It accounts for Amazon and every other on-line retailer. The severity of the situation is worse than I’ve described.

      1. “Normal is getting dressed in clothes that you buy for work and driving through traffic in a car that you are still paying for – in order to get to the job you need to pay for the clothes and the car, and the house you leave vacant all day so you can afford to live in it.”

        Ellen Goodman

  15. I thank you for this article. To me it explains the reverse behavior of a banking dynasty scion who in 2006 or probably earlier invested heavily in India, and is now all over China. It is China as dominant and also the superior world economy in that they tenaciously are educating their young in the American virtues that seem to be willfully abandoned in the current manifestation that calls itself a USA country. Plus the gold will back YUAN trade and it is nice of London to set that all up.
    Just ready to go.
    Very relaxing.

    I am afraid that quite literally when the events that you see clearly, which in fact are already coming into focus, currency devalue, cyber Bandar boys relate the so-called working class, poor class and the existing wealthy here will calmly follow leaders who enjoy rather violent things.
    So sad.
    Plus the State exists as 40-60% percent of transfer payments as GDP, which probably everybody knows.
    War, double cross, China almost ready. Russia gets to clean.
    What goes around comes around…..

    Russia could be a good ally or rather hard customer for the Americans in future. As media so controlled it is amazing that my hacker quarterly had the Rus Programmer down to his cell, Skype and email while the pontificates at USA media were still issuing we think it is this that.
    Just check your statement. How thoughtful.
    I am always watching the behavior of crowds these days. Being poor, and unemployed.
    Madness of societies and all that.

    I appreciate the time and effort the writer of this blog invests. I am sure it does a world of good.
    I also have given up being baffled and amazed by the Americans. It is not like their haven’t been people warning, pleading, screaming a them to change their political system in order to avoid certain dark fates. Rather tiring the demanding fat assed American who almost kills the homeless lady on the way to big trough big town buffet and the assholes bless them selves as they do it. Can you imagine the febrile minds of Iraqui males orphaned and homeless due to war.
    When she is most weak or the horrors but see I have no degree or endorsement by CNN or the pooper guy, in fact I don’t even have a car which is equivalent to AIDS pre 1980’s Murka, so why stay in such a evil place.
    And of course it big of those idiotic shits to say they are praying for me.
    I am praying for you too.

    I am in agreement with the Muslim and Hopi prophets.
    Time to go and help those that want me. I can watch from afar and myabe write something good.

    I realize now how immature, and stupid and arrogant I have been. Screaming at a young Kim Kardashian wanna be almost plowing into me in a crosswalk or almost getting into a fight with the Obama thug who is looking to get whitey is not what I want my life to be about.
    Trying to live the diversity trip as the Mexican tries to figure what he can scam ooutta me or the Mexicana lady offering herslf up as I seem to have a verifiable income so that is EBT pussy time.
    ANd it’s not like I am primo moral person here.

    These people don’t read books, they idolize whores, criminals and murderers.
    People who wan to create things, or help people, or understand and investigate are losers, wusses, and freaks. Politeness is kindness as it is despised.

    Quite literally the Obey Meme is what has been implemented and I am sure the dark lords of elite enjoy the pornography of control. They enjoy the mind controlled masses as profit centers.
    They want it all and unfortunatley even many good honest working people seem to just bend over and say here have at it, in fact I will pay for the lube.
    Yea, the macho American; The turban head dudes give that a run for th emoney and they got antiques and slippers, and hardly any tech.
    They will litrally hold up their phones to picturegram the nukes here.
    Twitter this, twitter that and you got China, Russia, practically everybody cpet the duffees here ready to watch the big show.
    AMERICAN HUSTLE, no lets reverse engineer that for truthful tommarrows. AMERICAN HUSTLED.

    The culture reflects the soul. They got a book to make you feel better but I prefer classics these days.
    Voltarie had it write. And think he watched those Versailles types get the old one two three.

    Sad but true. Many in my town have only people that live in huge mansions that can’t be sold in order that others (not just robbers) that are in control think they are still here. They play this Im in Murka but it’s not so fun even for them in a declining tax base and regime with Communist circa 1930 China aspirations.
    Ready for your organ donation comrade?

    When A billionarie type is scared of the regime you know it is time to leave.

    Empires come and go. The Americans want their destruction, in fact one only has to observe that it is way, way to far gone for it ever to come back to what I and others would call equilibrium.
    I now understand the importance of spirituality or what my mother tried to impart having lived through the Depression in Canada. Ironically her family left Austria prior to WWII as they were land farmers and they say the wonderful socialism as being incompatible to their “values”.
    i MUST DO THE SAME. I have already seen (I live in Southern CA) how a lot of very talented and capable people, are leaving. It is too tragic, sad and the scary shrugging of shoulders at impending realities.

  16. Why do authors endlessly lament about the death of growth? Growth is bad. Growth destroys what’s left of the future. Growth consumes even more resources making endless piles of usless junk.

    The growth paradigm is utter bullshit and always has been. The contraction many have warned about is here to stay, forever. All the low-hanging fruit is now totally consumed and gone. They’re mining SAND for god’s sake in order provide fuel for our cars!

    No growth is GOOD. Slowdown, shutdown of the “economy” (an oxymoron if there ever was one) is GOOD. Stop lamenting about a failed paradigm. I’m damned glad to see things slow down, it’s way overdue.

  17. I am talking about the Target, Neiman, various others hack. The hacker news from india had it before all others the writer a 24 year old indian girl from Delhi, she did not get credit. Then UK picked it up.

  18. Admin – another great article. It’s scary to see what’s going on. And Sears? I couldn’t imagine not having a Sears store (remember getting their Xmas catalogue as a kid?), but I can see it’s coming. I don’t even recognize this world anymore.

    I believe Social Security lulled a lot of people into not saving for retirement. If it hadn’t been introduced, perhaps more people would have saved, although the stores and Wall Street would not have benefited from this practice, as people would not have been out spending and consuming as they did. There would not have been the expansion of stores and malls.

  19. Think happened in 2012. China I don’t think will enjoy double cross. Tested major best radar evading missile last week.
    Plus that whole missile over my city area when QE forever was announced.

    US bones boy didn’t seem to convincing in Iran talks as body language of Chinese Minister was pure fury. The whole big AMerican thing seemed so bad the Rothschild stooge gave him a dress down.
    If I were China and holding all that debt.
    I mean the poor Chinese or rather the soon to be forever Chinese.

    I know that behind scenes China/RUS has agreements.
    Putin like here only a front and behind scenes O made deals like he did in Palm Springs.
    That is why he is there. Luckily the children here trust and it is obvious the less groowths, live poor meme is the paradigm.
    Already in my town they got a “gourmet” burgar bar and these Obey Childrens just are so pleased with themselves to have a burger out.
    Sad, already Mr. Googlgly Eyes the Soros prediction on Bloomberg is coming true.

    At least in RUS they had the free soviet cell blocks and gardens outside Moscow. Plus those schools. I am always in horror as I watch some retail clerk who I assume went to the LASD struggle to add a simple sum. These mafias will just have slaves forever in CAli.

    Plus the RUS have the WWII we starve Hitler even if we eat the mystery meat of the missing villege idiot guy. Here maybe the will do but have all the guns and not the sharpest knives in drawer. Easy to distract and easy to follow. I would assume that the calculator of certain MIC types is working overtime as we write this to sell of the assets as that will fund tommarrow in Idaho or Halliburton in UAE, which they did way back.

    And as you know in these types of situations the intelligence groups turn inward to beat the populace, and survive themselves. Of course already happening to but 2014 it is too be less hidden. Of course I am not expecting mass shudder as in Germany many just played the piano louder as those trains went by the churches.
    Here is not special. I know it is insulting but old time American would say that.

    There seems to be some fissures in Ship Obama. So maybe the groups that shot out the Caribou cafe wherel O staffers crafted The Death Watch Datbases will provide some Moscow 90’s entrainment for us. Who knows even the death boys are getting sequestered and quartered. When they say Manchurian is incompetent I just shake my head.
    He is way competent.

  20. BlackPOS? Why was the software named after the president?
    Who knew malware writers were racist?
    It should have been named HalfBlack,HalfWhitePOS.

  21. These Growth At Any Cost CEO’s need to strap on their golden parachutes and head towards the exit. Make way for evolution – everything changes and the old economy is turning into rust.

    Government will be next as people begin to realize that only suckers work. More and more people will move into the Black Market Economy starving government for the tax money it must have to support the FSA and its 20 million useless workers.

    The reset may turn violent as the banks may not like losing their current monopoly on the issuance of currency. Government may turn violent as well but starved for taxes, it will not be able to maintain its enforcement arm. Government may be forced to turn to the FSA in an attempt to confiscate whatever wealth remains but the freeshitters haven’t done a single thing in their entire lives and probably shouldn’t be counted on to do much of anything other than starve to death in the streets.

    Good times will be had by all.

  22. The chart I’d like to see is one of prepared/processed food sales versus raw ingredients. Do people buy more raw ingredients when times get tough or just switch to cheaper prepared foods? Here in Miami while there many be a lot of hype about growing your own food, it is rare to see a garden. And when you do see one, it is most likely in a high income neighborhood–they have a small garden because they want to, not because they need to. Even with the community gardens, the ones that struggle to stay open are in the poor neighborhoods, there’s long waiting list for the ones in the wealthier areas like Miami Beach.

  23. I see that what I had to say has been somewhat well received, but with the comments since, I thought I should revisit it with analysis instead of humor.

    Picture your local 3 anchor mall. They are dropping stores left and right. Actually, I can only conjure memories of my local one, I’ve not been there in years. When was the last time you bought a CD? And why would you want to today? Those were the first stores to go poof in the current digital age. But that’s not what I’m wanting to talk about.

    Picture that building, empty. No cars in the parking lot. You have a facility that has a massive amount of space, and cleared space around it that would be relatively trivial to put a double (razor wire topped) fence around. While you don’t get grass in your exercise yard, you have instant FEMA Camps.

    Simon Properties isn’t the only one (they happen to own a major mall around here). Most professional sports facilities have signed deals with DHS as well. I presume they didn’t know they were signing their facilities over to the devil when they did so. From the information I have, they did a trial run (I believe in Colorado, probably Denver) where they basically abducted children out of schools, and had actors show up to test the troops “begging for their children.” Simon Properties is a fairly minor player from what I have seen in my travels (tho they do own quite a few malls), I’m sure many of the other players in that market have done the same.

    They are trying to gather all of the National Guard under the DHS. They are trying to de-humanize all of the local police forces as well. At that point none would fear turning their weapons on innocent Americans. Something is coming, and I suspect it will happen by years end.

    This will not end well. Have your bug out (or in) plans in place, and get seat-belted in for the wild ride to come.

  24. Something I wanted to add. I had been hearing about the “FEMA Camp” boogie monster for well over a decade now. At first I refused to believe. I figured these things had to be pretty damn easy to spot, and the people spouting this crazy nonsense must be, well, crazy.

    (Forgive me those who have heard this before.)

    While my mind tried to grapple this concept, my first thought was, the USA would put these damn things where the USA put them in the past. It lead me to visit Manzanar. I would highly recommend that anyone who has the possibility of visiting one of those WWII American concentration camps,… Do so. A recent Hawaii Five-0 episode talked about one in Hawaii, I was not aware of that one. The few that existed in the eastern US have been mostly re-developed. I believe the most eastern one that still shows traces on the earth is in Colorado, and that one is not a park, just a matter of time before it goes poof.

    If you can, visit your local concentration camp. My visit to Manzanar moved me to tears (several times). If you don’t know what your country has done, then how can you stop it from happening again?

  25. (Easy to spot from Google Earth. Figured if there were these places being built we would see them from space years ago. Seems they were using that $$$ to coerce retail space providers to be complicit in “times of emergency.”)

  26. CEO Jamie Dimon has presided over the largest financial crime spree in world history. . . . It depends on how you count it, but it is more than a dozen, and more in the range of 15 major felonies that either the United States investigators have found, state investigators have found or foreign governments have found…JP Morgan’s frauds are epic in scale, unprecedented in world history…

    The system is ungovernable… It has already largely imploded.”

    William K. Black

  27. Most of the shuttered buildings will be a total loss. You can’t leave a building idle for a decade or two without maintenance.

    Regarding food stamps, I’m astounded that SNAP recipients aren’t required to be concurrently enrolled in a gardening or home canning class of some sort. There are a lot of free classes of this type. Also, gardeners tend to passionate about their hobby, and many would volunteer without significant compensation.

    Drive around any neighborhood, especially relatively new ones without a lot of tall trees, where it is easier to see into back yards. How many people have vegetable gardens? Low single digit percent, unfortunately.

    Due to the strong farm lobby, it is reasonable to expect that SNAP will continue. However, I doubt that the payments will keep up with food price inflation. Even Social Security payments, which are designed by law to index inflation (COLA) lag, due the government’s habit of lowballing consumer price levels with substitutions, seasonal adjustments, and hedonic massaging. Food stamps will lag even more, I’m guessing.

  28. While I agree with the thrust of this article, the lack of retail visits is not a very accurate way to judge consumer spending. Many people now shop the internet rather than brave the holiday season madness in brick and mortar stores, myself included.

  29. Lord Koos

    Please read for comprehension. On-line sales account for ONLY 6% of total retail sales in the country. Can you understand math?

    That means that 94% of the $4.4 trillion in retail sales is done by bricks and mortar stores. There are 1 million of them occupying 15 billion square feet.

  30. “Some retailers that seem to be doing well:

    Gun Shops
    Prescription Drug Stores
    Liquor Stores” – 6000 Feet

    Add one more “retailer” to your list: Pawn Shops.

  31. It’s the Matrix where the socialist superstate does everything for everyone to the point that no one ever needs to get out of bed.

  32. Just so you know, University of Phoenix isn’t all hype with no product. I’m in a Master’s program through UoP and I have to go to class every week – no on line for my program. I also have hundreds of hours of clinical time both completed and still to complete. And the price isn’t that much more per credit hour than my state universities for the same program, and the flexibility in scheduling work is definitely better. I choose my clinical days, not the program.

    Yes, I will be over $100,000 in debt by the time I am done, but that includes my associate’s, bachelor’s. and master’s degrees. And I, unlike whoever you’re speaking of derisively in your post, will have a job when I get done. Whether I will make enough to ever pay off my loans is up for discussion though…

    However. I’m making less an hour than I did 1 year out of school with my associate’s degree. I still have no health insurance. Even with Obamacare subsidies our OOP cost is $590 and the deductible is $12,700 for the two of us. Not buying that crap. The ironic thing? I work in health care.

    People at my workplace are cancelling their insurance right and left. They’re finding they just can’t afford it. More and more people are just saying that they’ll pay the fine and take their chances. And these are the young, healthy people. The ones Obamacare depends on.

    1. The University of Phoenix is a scam built upon Federal student loans. Less than half the people who enroll graduate, but Apollo keeps the tuition. The dupes keep the debt.

      Going $100k in debt for a University of Phoenix degree is about the dumbest fucking thing I’ve ever heard. Anyone dumb enough to do such a thing is virtually unemployable.

      When I see a resume with University of Phoenix on it, I dump it in the trash.

  33. I don’t have $100K in debt to the UoP. And I won’t when I’m done either. If you had read my comment, that was TOTAL debt. Ironically, the greatest debt I had prior to this was my student loan debt from the University of AZ for their microbiology and immunology program. Which I had to drop out of when my former spouse disappeared.

    Online only programs they have? Utter crap. The nursing programs? Actually pretty good. At least here in AZ. They, unlike many of the UoP programs, actually graduate a goodly percentage of those who enroll, and I can tell you that my learning experience is equal to my friend’s who is enrolled in NAU. You are not running a business in health care I would guess, but you can think what you like.

    The program that is crap is Grand Canyon University’s. Those resumes you should be throwing in the trash. Including their nursing program graduates. They have resorted to paying preceptors to take their students on, because it is so bad. Degree mill. I should know, I went there for my bachelor’s. Good thing I’m a motivated learner, because I learned pretty much nothing from them. Except how to write a paper in APA format.

  34. Here’s the best of all. A great many retail properties of all types were financed by Wall Street in 2004 – 2007 for 20% down. Under the CMBS programs, the loans were bundled and syndicated to investors. Approximately 90% of these loan were for a 10-year term and cannot be extended due to CMBS regs. The properties now have plenty of empty stores and will not able to get refinancing upon loan maturity, unless the owner pumps in a great deal of money which he is not going to do. Maturity defaults will abound in the coming years, leading to “lender” owned real estate, which will drive down retail property prices even further. Why doesn’t anyone care?

  35. Nice article, as usual, hard to dispute (I wish I could). Yesterday the wifey and I were walking on Montana ave. in Santa Monica, CA. This is an affluent area. Houses just north of it go for no less than 2 mil. We saw 12 empty retail spaces in about 6 small blocks. There are also empty spaces on Wilshire, and the promenade a few blocks away, also nice areas. The evidence of recovery is noticeable everywhere. Most of the businesses were some sort of clothing store, if I remember correctly. There are still a bunch left, at least 15. While we walked, we noticed there was hardly anyone in most stores except nail salons…gotta good…like, like OMG. Damn.

  36. The solution is already being discussed…every credit card or debit card should have a radio frequency identification chip (RFID) within it like the newer passports and driver’s licenses thanks to the 2014 implementation of the REAL I.D. ACT of 2005 that gets fully underway in over 20 states this year alone!

    Keep an eye on the current immigration bill being discussed…it has a provision in it that some warn would create a national biometric i.d. card system….(no worries of abuse with this probability, right?)

    It could never get like Aaron Russo suggested in his documentary “Freedom to Fascism”? With Obamacare and the push for medical records to go completely “online” like industry leader Kaiser has done for years should have alarm bells going off in most of our heads…


  37. Here’s an excerpt from an article about the chipped cards.

    Target breach ‘watershed event’ for security
    Natalie DiBlasio, USA TODAY

    Even as public pressure mounts for a more thief-proof system, it looks like the USA will remain behind the curve in credit card security until at least October 2015, credit card security analysts say.

    That’s the target date Visa, MasterCard, American Express and Discover set for complete the transition from insecure magnetic strip cards to secure chip cards and chip readers.

    The cards, called EMV for Europay, MasterCard and Visa, have encrypted chips that are almost impossible for criminals to duplicate.
    The card with the chip is still more expensive, but it’s moving closer to the cost of the magnetic strip, says Doug Johnson, who oversees risk management policy for the American Bankers Association.

    Banks have started giving out chipped cards, and retailers are starting to figure out their strategy to switch over to the technology. If retailers opt not to switch their devices, they will be liable for any fraud, Johnson says.

  38. I own two franchise retail stores that have over the last 7 yrs have had record breaking sales. 2012 was my best % as my sales were up almost 20% yoy, now before you think I believe everything is coming up roses, I am surrounded by vacant real estate to my left and right. 20k sq ft on one side 2k on the other around the corner are more vacancies. When all this starting happening yrs ago I thought “Oh God, here we go…” I was positive it was going to impact me, how could it not? To my complete and utter shock we not only survived we have thrived. My other location is in the same situation, anchor store closing, shops all around me going under and we surged. I’m as suprised as anyone else. Our prices are very competitve and in many cases cheaper or as cheap as internet prices. We do a lot of volume and I wheel and deal on a daily basis, my margins have taken a hit but volume has so far made up for it. I am very aware of what is going on (I read this blog don’t I?) right now I’m just riding it until the music stops.

    Maybe I’ll be heading for the dustbin of retail history too, the company is well known and established 75 yrs ago, we’re publicly traded (I can’t say) and I’d like to think we have a good reputation. I agree with most everything that has been said up above I’m hoping that we can survive the carnage that is coming. Nobody wins in a depression, just those who lose the least.

  39. It’s a well documented article but what it assumes is that all b2c shopping is made in-store. The reality is that e-commerce is growing tremendously, now representing about 5% of all retail sales, and this explains the lack of new store openings and store closures. What is real, though, is that the jobs in retail are not ever going to come back, and the question of what humanity will be left doing is a big question mark. We’re entering a new era.

  40. Admin,
    Great article, I really love your retail analysis. If you ever give up your college gig you would certainly be highly sought after for your retail insight. Having worked retail for a number of years, the ones I see surviving are the ones closest to their customers. The over built cookie cutter box stores have doomed themselves with their formulaic, debt driven, retail ponzi scheme. There will be room for stores that can keep competitive and keep in touch with their customers needs. Retail is never easy, it was never meant to be, but these buffoon CEOs felt they could continue to puke out stores at an astonishing rate and it would have little or no effect on existing store sales. Idiots.

    1. Boston Bob

      When I was at IKEA the CEO idiot wanted three stores in Boston – Sommerville, Stoughton, and another to the west.

      I ran the numbers, demographics and costs. It couldn’t work. I told them so. I got fired.

      They still only have Stoughton, 10 years after I left.

  41. Admin,
    I live in the town next to Stoughton, though I have never been to IKEA. I remember there being some political battle over the store in Somerville, someone must not have received their payoff. It would have never worked with two huge stores about 35 minutes apart. Boston metro area is not very large as you well know. It is funny how some CEOs can stand hearing the truth. I often wonder how the conversation goes when the lackeys are telling Jamie Dimon, “Hey boss this might be illegal.”

  42. The $17 trillion dollar question is how can the giant Ponzi scheme called the US (and world economy) be endlessly propped up by the fed without collapsing? Even the Fed and the very Wealthy meeting in Davos Switzerland can’t just decree that inflation (one of the most serious dangers we face) doesn’t exist.

    Even if big banks, the wealthiest investors, and those at the top of the financial system all agree that nations will never repay or even pay down their debt, how can the financial system keep going when most citizens can’t find decent jobs as personal and national debt rise?

    Accounting tricks, lies, and misleading propaganda (plus inflation, etc) cannot prevent economic collapse but they shouldn’t be able to keep the world economy afloat for much longer either. Economic stability can’t be based on lies.

    How many who post here would be willing to speculate on a timeline for economic implosion?

  43. ss

    I predicted the implosion last year and the year before that.

    I now predict the implosion for this year.

    Next year I’ll do the same.

    And eventually, I’ll be right.

  44. “Once you turn 65 you are no longer counted in the work force.”

    [I believe this is incorrect! Definition of ‘Civilian Labor Force’: A term used by the U.S. Bureau of Labor Statistics (BLS) to describe the subset of Americans who have jobs or are seeking a job, are at least 16 years old, are not serving in the military and are not institutionalized. In other words, all Americans who are eligible to work in the everyday U.S. economy.]

    1. The 2010 Census says there were 243 million people 16 years or older.

      The BLS says the Working Age population in 2010 was 237 million.

      Why aren’t they the same?

  45. “The 2010 Census says there were 243 million people 16 years or older. The BLS says the Working Age population in 2010 was 237 million. Why aren’t they the same?” ————- Admin

    from the BLS

    “Labor force measures are based on the civilian noninstitutional population 16 years old and over. Excluded are persons under 16 years of age, all persons confined to institutions such as nursing homes and prisons, and persons on active duty in the Armed Forces.”

  46. The real problem with Sears and Penneys is anachronism. The engine of our retail culture is the need to stay ahead of the pack, to be trendy, to feel good about yourself because you have the latest cool thing while he dolts around you still sport last year’s model. S & P never got this and so continued to carry the stigma of the old boring retailers. They both should have completely retooled themselves, including name changes, 20 years ago.

  47. I have a great nostalgia for Sears and JC Penney, but it’s hard to feel sorry for their upcoming demise. Like a number of great chains that lost touch with their customers, these stores too, must go the way of A&P, First National, etc etc etc.
    But why? This is why: the founders of these companies knew their customers, and knew what they wanted, and hired help to help the customers with quality material. I’ll bet dollars to donuts that the big guys who run these companies haven’t stepped foot in one of the stores they’re supposed to CEO. But that’s the way of the world, and their demise opens the door to merchants that do care and know how to schmooze the customers.

  48. I agree with about 99% of the analysis in this article. I specifically disagree with your blanket statement that government workers are unproductive. They are not all employees of the SEC, the DMV, and the IRS. My husband is an employee of a city parks department and he works very hard to give the customers at his facility a great experience. The problem is that he is underemployed — involuntarily working part time, when he wants to work more and his supervisor wants to schedule him more but cannot because of a quota system for part-timers. I’m 58 and have no retirement savings; I was bought out of the only plan I was nearly vested in when the company I worked for 23 years ago was bought out. That money, less than $10,000, is long gone. My father-in-law’s retirement nest egg was destroyed in the Enron – WorldCom debacles and he had to work until he was 71 as a security officer for a Blockbuster distribution facility. Blockbuster has since gone under.

    I have been self-employed for years and not terribly successfully, I am a journalist in the alternative/community sector where people want more programs and information, but want the workers to be volunteers. There is more work available than I have time to do, but little pay. Ever try to compete with FREE?

    Anyone can see the problems if they want to. But few have an answer. I am part of a growing group of people who say the money-jobs system is an epic fail. We must abandon money and jobs to move to a world view in which we produce only what we as individuals or as a community need, and we stop working when that need is met, until the next time we need something again. Everyone works alone or in voluntary groups to make what they are good at and interested in doing. No production for the sake of productivity, and no production for the sake of profit. No forced unemployment, no doing things we detest for money we don’t want. No fat cat billionaires like Charles Koch telling us that the poor would be better off if there were no minimum wage. This will also be good for the environment because we will not be wasting energy making stuff we don’t need.

    This will require a shift in societal values away from productivity for its own sake, away from profit, and away from exceptionalism. You aren’t special because you have more money. We were all born, naked and helpless,from the womb of a woman, and we are all going to die and you can’t take it with you. Get used to it.

    We have the gift economy now. You did not whip a dollar out of your diaper when you wanted your mother’s milk. We all have friends and family with whom we share without accounting. We all get the gifts of nature — if we don’t screw up the environment. The trees on our block don’t send a squirrel to our door once a month with a bill in its mouth for oxygen services rendered. So what we need to do it to expand the concept and practice of gifting globally.

    We can do that if we take in a few questions: Where are we headed now with our constructs of money and jobs? Do we really want to go there? Why must we “earn a living”? Aren’t we already living?

    Why must we pay to live on the planet we’re born on?

  49. Same thing downunder. The trouble is, way too many greedy landlords, small business can’t afford to compete cost wise with online stores. Retail is all but over. Going to be a lot of empty shops and sad landlords not ripping off folk no more. . And we are also sick to death of crap Made In China products that last days if not hours. Its a throw-away society. We reap what you sow.

  50. Why must we pay to live on the planet we’re born on? -KRW

    You raise an interesting question.

    Work is required whether we dig up roots or shoot arrows into fleeing warm-blooded things require energy.

    In what form should we barter that work I, or you did, be in the form of?

    Shall we trade calories burned (AWD would love this)

    Or in what we extract from the planet, our 67,000 mph spaceship, holds?

  51. Remember when Gateway and Egghead had great little stores everywhere? Between the two of them, I bought all of my computer shit there. Then they both closed them all and went online. Do either of those companies even exist anymore?

  52. I’ve seen Sears efforts at becoming an online marketplace. Walmart is kicking their butts. I order online every 6 months or so for essentials like laundry soap, etc. It cuts down on trips to the grocery store.

    It’s a shame American consumerism lacked the discipline to enforce quality and durability over price.

  53. Beautifully done Jim.

    Bleak and scary, with nary a mention of the true fallout.

    What will become of this nations’ schools, firemen, roads and cops when the remaining retail goes dark?

    I would shed a tear for these workers and owners if they ever would have opened their eyes to see what they were creating.

    Small business used to account for 75% of new, non-government, jobs. We used to pay nearly 70% of all local taxes too (that would be cops, firemen, teachers).

    None of these workers, their shoppers, their buyers, or most telling, the CEOs minded when their profit margins increased as they quit buying from American manufacturers and shipped jobs to China.

    No tears shed by them when Craftsman quit offering lifetime warranties and American-made steel.

    This is what you get when you lobby for the destruction of your very customer base.

    Now the city employees are out lobbying for the destruction of what little is left while the likes of the banksters and WallyWorld are being gifted no-tax zones.

    Reap what we sow indeed.

    We no longer sow a damn thing, other than fiat, fantasy and debt.

    The reaping is going to be show-stopping.

    Thanks again Admin.

  54. Anonymous, I am not arguing against work. We need to work to deepen our human experience and to provide practical goods and services to our community. What we do not need is to “earn a living” at the hands of other people. Other people have the right to accept or reject our products or labor time as they will, as they do now, but they do not have the right to determine the fact or quality of our existence by virtue of that acceptance or rejection. Anyone here has the same right to exist and live well as the Queen of England, the President of the United States or the Koch Brothers.

    Furthermore, money is irrational. We pay for some tasks under some circumstances and don’t pay for the same tasks in other circumstances. Why is it that a student teacher might be paid to work in a classroom as a teacher’s aide three days a week, but a parent is volunteering the other two days in the same classroom, doing the same things? If a task is paid, it should always be paid.

    As to your specific question, you ask it because you assume one-to-one exchange for everything. I question even the notion of exchange! (As does Genevieve Vaughan, author of “For-Giving: A Feminist Critique of Exchange”) What if we just do want we want to do and make it publicly available and take what we need from others who are doing what they want to do and making it available? The only accounting is from people keeping track of how much of their stuff or time is in demand, so that they have enough materials on hand and have scheduled their time appropriately. This would not mean that one person could not ask another for something custom-made and if someone wanted to give a gift to the person who made that thing, it would be fine. But the one-to-one exchange would not be mandatory.

    For example, I am a writer. My work is in public for people to read or not as they choose. Perhaps I also teach adult literacy (something I really would like to do if I did not have to spend so much time doing things for money!) Perhaps I read to children in the public library on Saturday afternoon. These are things I like to do, so I do them. I get my food from the farmers market where farmers who believe in organic agriculture congregate. I get my health care from healers, not people who pursue medicine primarily as a profitable business. My work is typed on a computer maintained by a local geek who is into fixing computers. Even the trash and recycling is picked up by people who understand and appreciate the need for a clean city. Maybe once a quarter I join them a la the California coastal cleanup.

    All work is needed at some time or another. The money-jobs system actually is perverse in recognizing this. We all need to eat, and to stay healthy, we all need a certain amount of fruits and vegetables. Yet farm workers are among the lowest paid people. Neurosurgeons have a very specialize set of skills that some people need. But if you need a crop harvested, a neurosurgeon is of no help.Why should the neurosurgeon be rich while the farm worker is poor?

    People do the best work when they want to do the task, not because they won’t eat if they don’t do what someone else wants them to do. This is the pleasure principle at work. Why not have an economy organized according to the pleasure principle, instead of production out of fear, resentment, or material need? Respect for the diversity of humanity will produce a wide mix of goods and services. People would not have to worry that they can’t get what they need because they are cut out of the “productive” economy because of discrimination against their race, gender, sexual orientation, ethnicity, religion, age, size or whatever. Those prejudices won’t go away, but they won’t affect anybody’s ability to live, either.

    Drop the age-old propaganda that you must earn your existence and answers to our economic problems will be obvious. Cling to that notion and see that options are all bad. There are more important things to do than buy and sell. We are headed for destruction as a species if we done see that.

  55. Admin,
    A belated thanks for your reply to my query regarding our country’s likely economic implosion.

    I can’t imagine how even the financial crooks on Mount Olympus (the Fed, big banks, and the wealthiest citizens) can maintain a charade (Ponzi scheme) indefinitely. It’s as if there is agreement behind the scenes to completely ignore debt while rising inflation created by the Fed is also ignored and stricken from the economic dictionary as if it doesn’t exist.

    It would be interesting if most posters here would be willing to offer commentary regarding this and even their own timelines for potential collapse.

  56. Another indication of long-term employment for Boomers:

    Many Baby Boomers Reluctant to Retire

    Engaged, financially struggling boomers more likely to work longer

    WASHINGTON, D.C. — True to their “live to work” reputation, some baby boomers are digging in their heels at the workplace as they approach the traditional retirement age of 65. While the average age at which U.S. retirees say they retired has risen steadily from 57 to 61 in the past two decades, boomers — the youngest of whom will turn 50 this year — will likely extend it even further. Nearly half (49%) of boomers still working say they don’t expect to retire until they are 66 or older, including one in 10 who predict they will never retire.


    Concerns about money likely play a significant role in explaining why so many baby boomers see themselves working longer. Even before the 2008-2009 recession, financial advisers were warning that some baby boomers were carrying too much debt, saving too little, and relying too heavily on Social Security to retire comfortably. And then came the economic collapse — a perfect storm of layoffs, pension and stock losses, and plummeting home values — which was particularly ill-timed for boomers who might otherwise have been in financial shape to retire on schedule with the start of their Social Security benefits.

    Gallup finds that baby boomers who strongly agree that they currently “have enough money to do everything [they] want to do” expect to retire at age 66. Boomers who strongly disagree with this statement predict they will retire significantly later, at age 73.

  57. Looks like Sears isn’t making a big grand announcement, but they are doing it one by one.

    They announced the closure of two Kmarts in Philly yesterday. One is downtown near the Liberty Bell.

  58. Without Rebirth, Malls Face Extinction: Developer

    American malls are facing a rebirth, and without a complete reinvention, they will be extinct within 10 to 15 years, the head of one of the nation’s largest privately held real estate companies says.

    “At one point [the indoor mall] may have met the developer’s needs—and even for awhile, the consumer’s needs—but it has outlived its usefulness,” Rick Caruso, founder and CEO of Caruso Affiliated, said in a keynote address Sunday at the National Retail Federation’s annual convention in New York.

  59. With the continued lowering prices of consumer goods it is harder for store to make a profit.

    eg laptops, printers, furniture, clothes are all cheaper and cheaper.

  60. I can’t understand why Sears didn’t fade the entire K-Mart operation back in the 80s. It was a dud then. I didn’t know there were any K-Marts left until I read it here.

    But, then, I hardly ever get out to the burbs, or to malls or suburban big box stores so how would I know?

  61. This article confirms why I keep coming back to this website. Just when I want to believe the lies that are told to us are actually suggesting a bright future, I get a snap back to reality when observing the data contained here. FASB waiving mark-to market rules allowed the extend and pretend environment to exist. When the consumer gets tapped out, the thousands of barges carrying shit made in China will slow their arrivals and you will see China slowing down as well causing a global depression. Walmart, JCPenny, Target and all the box stores will have a major reset.

  62. Not Dead Yet: The American Shopping Mall is Changing, Not Going Away

    March 17, 2014

    Last Friday sandwich chain Quiznos filed for bankruptcy protection citing high debt loads and heavy completion. Coming just days after a similar filing from pizza chain Sbarro, Quiznos’ bankruptcy was the second half of a one-two gut punch for shopping malls at a time when they’ve never been more vulnerable. A decade ago there were more than 1,100 enclosed shopping malls in the U.S. Since then more than 400 have either been “re-purposed” or closed outright. No new malls have been completed since at least 2009.

    The trend has become so pronounced it has its own website, where shoppers and developers swap stories and mourn the demise of their childhood haunts.

    Earlier this year Starbucks’ CEO Howard Schultz told analysts that the drop in mall foot-traffic last year marked a permanent shift in consumer behavior; a simple strategic shift for his company but a death sentence for malls. Nimble retailers can redirect their marketing energy to on-line sales but shopping malls raison d’etre is to act as gathering places. Moving to the Internet isn’t an option.

    It’s no surprise that malls are facing a life-threatening shift in consumer tastes but their decline seems to have gone from chronic to acute in the last few months. While destination attractions like Minnesota’s Mall of America with 520 stores, a theme park, wedding chapel, its own zip code and more than 4.2 million feet of real estate continue to thrive, b-list locations are ghost towns.

    E-commerce didn’t kill the shopping mall

    Contrary to popular belief, online shopping didn’t kill malls. As of the fourth quarter of 2013 only 6% of all U.S. retail sales were done online. Sales are migrating away from brick and mortar stores but the demise of lesser malls is due to a confluence of consolidation in the retail industry as a whole, the death of the smaller specialty store “hang-outs” and the rise of retail Death Stars like the Mall of America or the Mall at Short Hills.

    Retail consolidation

    Malls thrive on big box department stores acting as anchor tenants. Twenty-five years ago chains like Bloomingdales, Marshall Fields, Hudson’s, Dayton’s and Macy’s (M) would fight for a prime corner. Today all five chains are part of Macy’s. Donaldson’s, Mervyn’s and Gimbel’s are gone to bankruptcy. Left standing are Macy’s, Nordstrom (JWN), Neiman-Marcus and Saks at the higher end with weaklings like Sears (SHLD) and J.C. Penney (JCP) struggling to stay alive.

    With fewer companies bidding for prime locations mall rents have collapsed and vacancies increased. Quite understandably Macy’s doesn’t have any interest in having its brands compete against each other at a single location.

    Dead or dying “hang-out” stores

    As Aaron Task and I discuss in the attached video, malls used to be places to hang out as much as shop. The Internet actually legitimately killed bookstores, arcades and record stores and the days of parents letting their kids roam freely around the mall are long gone. With the food court emptying out thanks to the bankruptcies of greasy spoons like Sbarro, that leaves movie theaters as the only legacy of days when kids would spend a full day just roaming from store to store.

    Higher Expectations

    When Southdale became the first modern enclosed mall mid-50s it was a groundbreaking social experiment. Located just outside of Minneapolis in a town called Edina, the opening of Southdale was a major media event. Life magazine called it the “splashiest center in the U.S.” and marveled at the mall’s “goldfish pond, birds, art and 10 acres of stores all . . . under one Minnesota roof.” I personally once spent an entire day in Southdale just looking at birds while my mother shopped.

    Today it takes something more along the lines of an Imax theater and indoor roller coasters to get a teenager’s attention. The economics of having multiple such destinations within driving distance of one another simply don’t work.

    The Future

    Malls as a whole aren’t dying, but the country no longer needs several thousand of them. From roughly 1,100 shopping malls today there will likely be somewhere around half that number within the next 20 years. Of the ones that are closed, some will indeed become ghost malls but most will be converted into more useful public spaces to serve the communities that have been built up around them over the last 50 years.

    That’s a much different picture but it’s not the same as an outright disappearance of centralized markets. What the doomsayers don’t understand is that malls have never been entirely about shopping. They are about interacting with other living human beings. Victor Gruen, the man who created Southdale, wasn’t a merchant. He was a sociologist. Beyond bringing Minnesotans in out of the cold Gruen was trying to create a centralized community to counter the stifling banality of American suburbs.

    What Gruen understood was that humans have been gathering in centralized meeting areas since at least 10th century BC. Americans aren’t becoming shut-ins just because allows them to shop at home.

    Ghost malls are depressing, but vibrant shopping centers serve community needs well beyond concentrated shopping. For the elderly in particular malls are a place to gather socially and even get some exercise. The Census Bureau estimates there will be more than 88 million people over 65 in America by 2050, more than twice the current figure.

    That alone gives modern malls a core customer base. Add to that the economies of scale allowing developers to replace antiquated shopping centers with Mega Malls featuring fine dining, monster theaters and virtual amusement parks and it becomes clear that the future of malls looks very much like retail itself: fewer locations, better execution and survival of the fittest. It’s hardly cause for mourning.


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