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The Retail Apocalypse

Johnny Au

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This is a thread to discuss the Retail Apocalypse and its impact in retail.

There have been many permanent store closings during the mid-2010s.

Even Toys Я Us filed for bankruptcy protection.

It would be interesting to see what happens to various shopping centres and what would replace the stores that went under.
 
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The Silent Crisis of Retail Employment
https://www.theatlantic.com/business/archive/2017/04/the-silent-crisis-of-retail-employment/523428/


Overall retail employment has fallen every month this year. Department stores, including Macy’s and JC Penney, have shed nearly 100,000 jobs since October—more than the total number of coal miners or steel workers currently employed in the U.S. Even America’s richest areas are getting hit: Employment in New York City clothing stores has fallen three years in a row, the longest period of decline on record, going back to the early 1990s.

When some industries lose workers, they win the consolation prize of empty political promises to turn back time. During the presidential campaign, Donald Trump and Hillary Clinton went up and down Appalachia—and far beyond—to lament the job losses suffered by manufacturers and miners. The loss of these jobs has been devastating to many cities and towns. But department stores have lost 18 times more workers than coal mining since 2001.
 
Interesting, as we are seeing retailers such as Nordstrom making aggressive moves into our retail landscape at a time when trends seem to suggest it could be a losing strategy (see Target). Just speaking anecdotally here, but the Eaton Centre and Square One locations seem to be mostly barren of customers, other than those just passing through. I don't think Saks is doing much better.

I prefer online shopping for several reasons:
  • convenience (of course, the big one; who has time to visit 3-4 locations to find that one thing you are looking for?)
  • better selection (the global market gives you access to just about anything)
  • I do my own research (the kid at Best Buy can't tell me anything about a product I don't already know -- and customer reviews can be very useful)
  • consistent customer service (just a digital cart; no incompetent/disorganized/useless staff)
For brick-and-mortar, I think stores like Uniqlo will fare much better than some of the lumbering dinosaurs out there. Their items are of decent quality, are fairly priced (thus, people will buy more), and you can't go to Amazon to get the exact same thing. At Nordstrom, they are taking the "sure, we'll charge you $300 for a pair of jeans, but would you like a coffee at our cafe or a shot of scotch from our bar?" approach.

Already it seems malls are having a harder time attracting retailers as tenants (see Sheppard Centre). Malls are becoming more like glorified food courts, built more for socializing than for shopping. It will be interesting to watch what happens over the next several years, especially if the economy takes a significant dip. A lot of retail (Coach bags, Canada Goose) has thrived during a time when people were borrowing money hand over fist. What happens when the music stops and the debt/credit hangover begins?

At the end of the day, people will gravitate towards the services that provide a balance of price, quality, and convenience. Without a major reinvention, the bulk of "retail"as we know it will likely pass into the dust.
 
For struggling stores in Canada, this would be the final nail in the coffin.


Canadian retailers worry as Trump eyes duty-free threshold increase in NAFTA talks
U.S. administration threshold raised from $20 Cdn to 'value comparable' to its $800 US limit
http://www.cbc.ca/news/canada/briti...e-threshold-increase-in-nafta-talks-1.4210972

The CEO of Harry Rosen Inc. says it would be a catastrophe for Canadian retailers if Ottawa gave in to U.S. demands to raise the value of goods American stores can send to Canada tax and duty free.

The U.S. is calling for the so-called de minimis threshold to be increased from $20 Cdn to a "value comparable" to its $800 US limit. The request is one of the American administration's objectives for the renegotiation of the North American Free Trade Agreement.

Larry Rosen says it would create a huge disadvantage for Canadian retailers, who must charge taxes and whose goods would become comparatively more expensive as a result.


He says it would be a boon for U.S. border towns, like Buffalo, as Canadian retailers including Harry Rosen would move a chunk of their businesses, like warehouses, south of the border.

Canada's de minimis threshold has remained the same since 1985 but is a hotly debated topic with some lobbying government to increase the figure, while others staunchly oppose a change.

The Retail Council of Canada has advocated against raising the amount, saying even a small increase could lead to job losses.
 
Is there any consumer market where storefront retail is actually on an upward trajectory? Perhaps smart phone sales and repairs?
 
There's also strong rumours right now that HBC may be putting an end to Sak's entry in Canada early in 2018. The stores are underperforming massively.
With all these major retailers going under or exiting, it's going to be really tough to fill anchor tenants for large commercial retail properties. Some malls are pretty dead and haven't seemed to recover since losing tenants such as Target.
 
Malls can redevelop empty spaces, go mixed-use by adding hotels, residential, entertainment centres. That's the future for them.

42
 
Malls can redevelop empty spaces, go mixed-use by adding hotels, residential, entertainment centres. That's the future for them.

42

Some of the malls may/will have a bit of a chicken or the egg problem in the short term - they are doing badly partly because to their location (in areas of low desirability).

AoD
 
There's also strong rumours right now that HBC may be putting an end to Sak's entry in Canada early in 2018. The stores are underperforming massively.

Interesting. I wonder if Nordstrom's is on the same path? Having been in their stores I see very little to differentiate them from Saks or HBC.
 

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