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Retail's Death Rattle Grows Louder
rickackerman.com ^ | June 2, 2014 | Rick Ackerman

Posted on 06/11/2014 6:47:47 AM PDT by dennisw

[America’s supposed recovery from The Great Recession is a hoax so obvious that only the mainstream news media, too lazy, cowardly and stupid to stray even an inch from the officially approved narrative, could fail to see it. And yet, here we are, so glutted with brick-and-mortar retail space that even if it were to be reduced by half there would still be an economically fatal overhang. Sales are plummeting and malls are dying – a matter of no small consequence, considering that retail business supposedly makes up two-thirds of America’s GDP. In the trenchant commentary below, the intrepid Jim Quinn updates and amplifies an article he wrote four months ago on this subject. With his kind permission, I am reprinting it here because it deserves as wide an audience as possible. The original is copiously illustrated with charts and can be accessed at the link above.  Other powerful essays by Jim can be found at numerous high-traffic web sites, including those shining beacons of truth, LewRockwell.com and ZeroHedge. Also, you can find David Stockman’s approving comments on Jim’s essay here.  RA]

The definition of death rattle is a sound often produced by someone who is near death when fluids such as saliva and bronchial secretions accumulate in the throat and upper chest. The person can’t swallow and emits a deepening wheezing sound as they gasp for breath. This can go on for two or three days before death relieves them of their misery. The American retail industry is emitting an unmistakable wheezing sound as a long slow painful death approaches.

It was exactly four months ago when I wrote The Retail Death Rattle. Here are some excerpts from that article:

A Warning Siren

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 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.

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.

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.

Retail store results for the 1st quarter of 2014 have been rolling in over the last week. It seems the hideous government reported retail sales results over the last six months are being confirmed by the dying bricks and mortar mega-chains. In case you missed the corporate mainstream media not reporting the facts and doing their usual positive spin, here are the absolutely dreadful headlines:

Never Reported

Of course, those headlines were never reported. I went to each earnings report and gathered the info that should have been reported by the CNBC bimbos and hacks. Anything you heard surely had a Wall Street spin attached, like the standard BETTER THAN EXPECTED. I love that one. At the start of the quarter the Wall Street shysters post earnings expectations. As the quarter progresses, the company whispers the bad news to Wall Street and the earnings expectations are lowered. Then the company beats the lowered earnings expectation by a penny and the Wall Street scum hail it as a great achievement.  The muppets must be sacrificed to sustain the Wall Street bonus pool. Wall Street investment bank geniuses rated JC Penney a buy from $85 per share in 2007 all the way down to $5 a share in 2013. No more needs to be said about Wall Street “analysis”.

It seems even the lowered expectation scam hasn’t worked this time. U.S. retailer profits have missed lowered expectations by the most in 13 years. They generally “beat” expectations by 3% when the game is being played properly. They’ve missed expectations in the 1st quarter by 3.2%, the worst miss since the fourth quarter of 2000. If my memory serves me right, I believe the economy entered recession shortly thereafter. The brilliant Ivy League trained Wall Street MBAs, earning high six digit salaries on Wall Street, predicted a 13% increase in retailer profits for the first quarter. A monkey with a magic 8 ball could do a better job than these Wall Street big swinging dicks.

Corporate Flunkies

The highly compensated flunkies who sit in the corner CEO office of the mega-retail chains trotted out the usual drivel about cold and snowy winter weather and looking forward to tremendous success over the remainder of the year. How do these excuse machine CEO’s explain the success of many high end retailers during the first quarter? Doesn’t weather impact stores that cater to the .01%? The continued unrelenting decline in profits of retailers, dependent upon the working class, couldn’t have anything to do with this chart? It seems only the oligarchs have made much progress over the last four decades.

Retail CEO gurus all think they have a master plan to revive sales. I’ll let you in on a secret. They don’t really have a plan. They have no idea why they experienced tremendous success from 2000 through 2007, and why their businesses have not revived since the 2008 financial collapse. Retail CEOs are not the sharpest tools in the shed. They were born on third base and thought they hit a triple. Now they are stranded there, with no hope of getting home. They should be figuring out how to position themselves for the multi-year contraction in sales, but their egos and hubris will keep them from taking the actions necessary to keep their companies afloat in the next decade. Bankruptcy awaits. The front line workers will be shit canned and the CEO will get a golden parachute. It’s the American way.

The Old Retail Formula

The secret to retail success before 2007 was: create or copy a successful concept; get Wall Street financing and go public ASAP; source all your inventory from Far East slave labor factories; hire thousands of minimum wage level workers to process transactions; build hundreds of new stores every year to cover up the fact the existing stores had deteriorating performance; convince millions of gullible dupes to buy cheap Chinese shit they didn’t need with money they didn’t have; and pretend this didn’t solely rely upon cheap easy debt pumped into the veins of American consumers by the Federal Reserve and their Wall Street bank owners. The financial crisis in 2008 revealed everyone was swimming naked, when the tide of easy credit subsided.

The pundits, politicians and delusional retail CEOs continue to await the revival of retail sales as if reality doesn’t exist. The 1 million retail stores, 109,000 shopping centers, and nearly 15 billion square feet of retail space for an aging, increasingly impoverished, and savings poor populace might be a tad too much and will require a slight downsizing – say 3 or 4 billion square feet. Considering the debt fueled frenzy from 2000 through 2008 added 2.7 billion square feet to our suburban sprawl concrete landscape, a divestiture of that foolish investment will be the floor. If you think there are a lot of SPACE AVAILABLE signs dotting the countryside, you ain’t seen nothing yet. The mega-chains have already halted all expansion. That was the first step. The weaker players like Radio Shack, Sears, Family Dollar, Coldwater Creek, Staples, Barnes & Noble, Blockbuster and dozens of others are already closing stores by the hundreds. Thousands more will follow.

Not Mere Opinion

This isn’t some doom and gloom prediction based on nothing but my opinion. This is the inevitable result of demographic certainties, unequivocal data, and the consequences of a retailer herd mentality and lemming like behavior of consumers. The open and shut case for further shuttering of 3 to 4 billion square feet of retail is as follows:

‘Recovery’ Is a Scam

The entire engineered “recovery” since 2009 has been nothing but a Federal Reserve/U.S. Treasury conceived, debt manufactured scam. These highly educated lackeys for the establishment have been tasked with keeping the U.S. Titanic afloat until the oligarchs can safely depart on the lifeboats with all the ship’s jewels safely stowed in their pockets. There has been no housing recovery. There has been no jobs recovery. There has been no auto sales recovery. Giving a vehicle to someone with a 580 credit score with a 0% seven year loan is not a sale. It’s a repossession in waiting. The government supplied student loans are going to functional illiterates who are majoring in texting, facebooking and twittering. Do you think these indebted University of Phoenix dropouts living in their parents’ basements are going to spur a housing and retail sales recovery? This Keynesian “solution” was designed to produce the appearance of recovery, convince the masses to resume their debt based consumption, and add more treasure into the vaults of the Wall Street banks.

The master plan has failed miserably in reviving the economy. Savings, capital investment, and debt reduction are the necessary ingredients for a sustained healthy economic system. Debt based personal consumption of cheap foreign produced baubles & gadgets, $1 trillion government deficits to sustain the warfare/welfare state, along with a corrupt political and rigged financial system are the explosive concoction which will blow our economic system sky high. Facts can be ignored. Media propaganda can convince the willfully ignorant to remain so. The Federal Reserve can buy every Treasury bond issued to fund an out of control government. But eventually reality will shatter the delusions of millions as the debt based Ponzi scheme will run out of dupes and collapse in a flaming heap.

The inevitable shuttering of at least 3 billion square feet of retail space is a certainty. The aging demographics of the U.S. population, dire economic situation of both young and old, and sheer lunacy of the retail expansion since 2000, guarantee a future of ghost malls, decaying weed infested empty parking lots, retailer bankruptcies, real estate developer bankruptcies, massive loan losses for the banking industry, and the loss of millions of retail jobs. Since I always look for a silver lining in a black cloud, I predict a bright future for the SPACE AVAILABLE and GOING OUT OF BUSINESS sign making companies.



TOPICS: Business/Economy; Culture/Society; Government; News/Current Events
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1 posted on 06/11/2014 6:47:47 AM PDT by dennisw
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To: dennisw

75 comments on this over here>>>>
http://www.rickackerman.com/2014/06/retail-death-rattle-grows-louder/


2 posted on 06/11/2014 6:48:20 AM PDT by dennisw (The first principle is to find out who you are then you can achieve anything -- Buddhist monk)
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To: dennisw

In the Obama Era, bad news such as listed here, is just not reported.

If a Republican were president, I bet that we would hear much more about business failures and struggles of major retailers.

Instead, we get doctored unemployment figures, and other distorted economic news.

The media just can’t bring themselves to report anything which would reflect badly on the Obama administration policies.

Any bad news which does get reported, gets reported with the qualifier that some outside force caused the problems. For example, the recent reports that the economy contracted in the 1st quarter of 2014 was blamed on bad weather.

In the era of Obama, any bad things happening will be blamed on some outside force out of anyone’s control, rather than on the policies of this president.


3 posted on 06/11/2014 6:53:14 AM PDT by Dilbert San Diego (et o)
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To: dennisw
Gee. Maybe Obama can take over the retail industry.

Why do we need so many damn stores anyway?

We just need one store. O-Mart.

Everything you need in one aisle.

Open every day but Monday, Tuesday, Wednesday, Thursday, Friday and Saturday. Open Noon to 1 on Sunday (closed for lunch between 12:15 and 12:45)

Free shipping (please allow five to ten business years)

IRS Agents on hand to assist with all forms of payment.

4 posted on 06/11/2014 6:53:50 AM PDT by Texas Eagle (If it wasn't for double-standards, Liberals would have no standards at all -- Texas Eagle)
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To: dennisw

Fascinating article!

My wife and I buy pretty much everything online anymore. Had to go to the Apple store at the Mall a few weeks ago. But for the Apple store, the Mall was EMPTY.


5 posted on 06/11/2014 6:54:18 AM PDT by RIghtwardHo
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To: dennisw

Retail space is no measure of anything as floor space is real cheap right now and cheaper than in any other country due to land being available.

A better measure is stock holdings: How much merchandise is available.


6 posted on 06/11/2014 6:56:38 AM PDT by CodeToad (Arm Up! They Are!)
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To: dennisw
If you want to hear something ironically funny, the local postal union recently picketed our local Staples office supply store for hosting a U.S.Post Office facility. The gist of their argument was that it wasn't fair to locate a post office facility in a retailer which was closing stores.

Strange, isn't it, how some of us actually like the idea that we are able to park off a busy street and not stand in a long line during very limited daytime hours to mail a package.

7 posted on 06/11/2014 6:58:51 AM PDT by Vigilanteman (Obama: Fake black man. Fake Messiah. Fake American. How many fakes can you fit in one Zer0?)
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To: Texas Eagle

—already achieved in Venezuela, —the Obama goal for the U.S.—


8 posted on 06/11/2014 7:00:46 AM PDT by rellimpank (--don't believe anything the media or government says about firearms or explosives--)
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To: RIghtwardHo

I’ve heard rumors that some shopping malls will be converted into Section 8 housing. I’ve seen some malls with a number of empty storefronts, which makes you wonder how the mall owners are making money. Most mall owners have a mortgage to pay, which they pay from the rental income from their retail tenants.


9 posted on 06/11/2014 7:02:58 AM PDT by Dilbert San Diego (et o)
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To: RIghtwardHo

I’ve also migrated to buying lots of everyday household items online as well. Our experience can be multiplied by millions across the country. There is not as much need for as much retail shopping space as in years past, due to online shopping.


10 posted on 06/11/2014 7:04:31 AM PDT by Dilbert San Diego (et o)
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To: Dilbert San Diego

The media and their party politicized the economy for their own purposes. When their media started crowing about the 1st recovery summer, just a few months after baraq slithered into office, I knew then it was bs.

When Reagan inherited a much bigger mess from Carter, it took a couple of years to turn the economy around. And yet baraq got credit for turning it around in a few months.

Here we go into wreckovery summer version 6.0


11 posted on 06/11/2014 7:07:12 AM PDT by Texas resident (The democrat party is now the CPUSA)
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To: dennisw

My own person observations recently reflect what this guy is saying. This year I have seen a noticeable drop off in the number of customers in Walmart and in the grocery stores and the traffic on the roads is even substantially lower. I know it’s not scientific by any means but it mirrors what he is saying indirectly. I think it reflects that people have less money to spend and that there a larger percentage of the people are unemployed than the lies from the WH suggest.


12 posted on 06/11/2014 7:07:32 AM PDT by jsanders2001
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To: dennisw

I’ve ridden one of my motorcycles all over the state of VA for years. I ride about 20k miles a year.

Two things I’ve observed in the last 2 years:

1. Businesses closing down all over the place, one’s that have been there for years.

2. Thousands - and I mean thousands - of acres of old hardwood forest are being clear-cut everywhere. Heart-breaking. Appears land-owners are desperate for the money.

It ain’t good out there folks - and it is a lot worse than anyone will let on......


13 posted on 06/11/2014 7:08:03 AM PDT by Arlis
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To: dennisw

I think Amazon and other on-line outlets have a lot to do w/ retail’s troubles.


14 posted on 06/11/2014 7:08:57 AM PDT by Pietro
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To: Texas resident

Yep, we’re on the verge of yet another recovery summer.

What were the results of other recovery summers? Anything to write home about????


15 posted on 06/11/2014 7:09:29 AM PDT by Dilbert San Diego (et o)
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To: dennisw
...Americans have run out of time, money, jobs, and illusions.

Yeah, AFTER we discovered elite liberals had broken into the storehouse and walked off with everything they hadn't already stolen...

16 posted on 06/11/2014 7:12:14 AM PDT by GOPJ (#2 reply spot RESERVED for Tokyo Rose comments: "nothing works - give up - it's all hopeless".)
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To: dennisw

And the folks that have put up savings will see their hard earned money devalued to 10% of their investment. All that sacrifice for nothing, as they are just as broke as those that saved nothing.


17 posted on 06/11/2014 7:13:14 AM PDT by Blue Collar Christian (this time)
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To: Arlis

Lots of empty storefronts here in MA. I’ve lived near Framingham, which is the shopping capital of Massachusetts, for about 50 years. Prior to the fundamental transformation of America, I had never seen an empty storefront. Now they’re everywhere. Maybe 5-10%. And two major stores were replaced by a giant Salvation Army store, and another similar second-hand store.


18 posted on 06/11/2014 7:13:20 AM PDT by St_Thomas_Aquinas ( Isaiah 22:22, Matthew 16:19, Revelation 3:7)
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To: CodeToad

The first sign a store is in trouble is when there are fewer staff to assist you.

The next sign is when the shelves are not kept fully stocked.

And the last sign is when they begin to scrimp on maintenance and keeping the place clean.


19 posted on 06/11/2014 7:13:25 AM PDT by CIB-173RDABN (I do not doubt that our climate changes. I only doubt that anything man does has any effect.)
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To: RIghtwardHo

I’ve been a Costco member since 1988 and moved from Seattle to central KY in 2011. We went from having five or six costcos within 30 minutes to having one within 1 hour and 45 minutes. Enter Costco online and free shipping.

We do most of our shopping at Costco online and amazon. Locally we use Lowe’s for building supplies and Tractor Supply for everything else. And we rarely eat out. Yeah, we just turned 60. We’re in that cheapskate group. We don’t even do cable TV...


20 posted on 06/11/2014 7:14:27 AM PDT by cuban leaf
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