High interest rates are finally starting to take their toll on the US Mall sector. The first question is the closure of 30,000 stores significant? In short no, not at all. The impact on Mall occupancy is minuscule, but it does impact commercial REITs that specialize in Malls because their profits are slightly degraded.
As a strategist, the question becomes what does that mean? There are two converging factors, labour costs and the internet are finally taking a heavy toll on the Mall business. You just have to walk into a Best Buy, as an example, and there are no sales associates around, and those who are there no next to nothing about the products they sell. Worse, because of higher interest rates the showrooms are now full of floor models but no stocks.
Labour costs are rising, because there are fewer 18-year-olds looking for part-time work. The often-heard complaints that stores/restaurants cannot find anyone to work for minimum wages tell you everything you need to know these company capitalists don't understand that the labour shortage means that you need to pay higher wages.
So when we went skiing in Colorado earlier this year, we noticed that the young man knew absolutely nothing about the projection TV he was selling, and the one our friends wanted to purchase was out of stock. When we got to our friend's house he went on Amazon, found professional reviews and ordered the projection TV, even better it was delivered to his house in Vail directly. It arrived before we did. This told us everything we needed to know about the state of retail in the United States.
Retail still works on the principle that if you are in the store you are captive, and therefore will have an urge to purchase goods even if they don't meet your specifications. My wife was looking for a ski jacket, she found the one she wanted. The fit was good but it was bright yellow and she looked like an idiot. The store could not/would not try to find one of a different colour. On the way back to our friend's house, she bought the jacket (the right size and colour) directly from the manufacturer's website, it was 25% cheaper than the store one (ok they were having a sale) and it was delivered in Vail the day of our arrival.
Two simple instances, where retail stores failed.
Our experience in the UK is similar for our farming needs we purchase everything we need directly, never mind the stores, we also bypass the wholesalers. The bypass is due to the lack of need or services. For us, it started almost from the very beginning. I had contacted a store to purchase a specific type of grass, but they were out of stock so I called the wholesaler and they said that they would not talk to us since we were an end user. I eventually called the manufacturer (we were purchasing several tons of seeds). The seeds were delivered in 48 hours. Needed new gates, called the manufacturer, new posts or wire same thing. In every case, the manufacturers had opened stores that competed with the wholesalers and the retailers. It gets worse, the seed company even sent an expect to provide free consultation on the best type of grass to plant on our various fields. they also provided us and our neighbours with our corn seeds this year.
The modern store we are all used to today is an invention of the 20th century. There is no reason for a concept born after WWII to survive in 2024 and beyond.
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