IS THERE A RETAIL APOCALYPSE OR RETAIL EVOLUTION?
Peter Morris and I discuss if there really is a Retail Apocalypse, just, fake news or, as Peter suggests, an evolution or shift. This written portion of my post does not cover everything Peter and I discuss on this show. If you want to watch the full video, click on the image below. If you want to listen to the entire audio, only version, click on the link, below. There is also a full written article as part of this post. This was recorded as part of our CRE Radio & TV, LIVE!
Click on the image below to listen to or download the audio only podcast.
MASSIVE AMOUNT OF STORE CLOSURES IN 2019
As part of our discussion, we reference an article in Retail Dive referencing research from Coresight Research, their forecast that there will be 12,000 store closures in 2019, the recent Barney’s and Perkins and Marie Calendars’ bankruptcies and the UBS Securities’ Analysts’ forecast that there needs to be an additional 75,000 more store closures by the year, 2026. When you add all of this to the prediction that Ecommerce will continue to penetrate the retail market from its current 16% to 25% or more it really sounds bad for brick and mortar retail. Doesn’t it?
ARE THE STORE CLOSURES EVIDENCE OF A RETAIL EVOLUTION?
Peter and I conclude that it may not be so much of a Retail Apocalypse as aa Retail Evolution. Yes, for some retailers and landlord’s it is and will be an Apocalypse. But, for many others, it doesn’t have to be. We also caution that these one-sided predictions, often do not indicate whether they have taken into account store openings or changes in format. Using the example of Pizza Hut’s planned, 700 store closings. Sounds an awful lot like a “Retail Apocalypse,” yes? Well, not so fast. What they are looking to do is change their decades old format of larger, sit down restaurants to smaller take-out style. For every store they close, they may be opening twice as many smaller locations. Peter references “right sizing” and explains the concept.
WHICH RETAIL WILL SURVIVE AS THINGS CHANGE?
Have you ever read the book, “Who Moved My Cheese?” If you feel like the earth is moving underneath your feet, (yes this is a metaphor), then I highly recommend it. It’s a short read, something that I call a “potty reader”. It also uses a metaphor, that of how certain mice can navigate a maze when they realize that their cheese is no longer where it once was and how some mice never realize their cheese is no longer where it used to be.
The retail “cheese” hasn’t moved, for most, but it is moving and moving rapidly.
WHAT IS CAUSING THE STORE CLOSURES?
Peter and I explore some of what we believe is causing the store closures.
Is it a shift in demographics? Is it all about Ecommerce?
WHAT IS PSYCHOGRAPHICS?
Peter likes to use the term psychographics. What is psychographics, anyhow?
As it relates to consumers, a Google search reveals a dictionary description as an, “Analysis of consumer lifestyles to create a detailed customer profile. … As you can see, psychographics focuses on the underlying interests, activities, values, and opinions that motivate consumers to buy.”
ARE BUYING HABITS CHANGING?
What about changes in buying habits?
IS RETAIL OVERBUILT?
Is retail overbuilt? In this respect, we also touch on one of my pet peeves; diminishing value. At least around where I live, I see restaurant prices going up and value going down. I am confident that when there is an economic downturn, these low value restaurants will be the first to go by way of the dinosaurs.
We also touch upon the likelihood of a retailer emerging from a Chapter 11 bankruptcy and how a retailer bankruptcy often differs from other bankruptcies.
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Howard F. Kline is a Nevada licensed real estate advisor with SVN The Equity Group, located in Las Vegas Nevada. He has also been a licensed California attorney for over 42 years, primarily focused on commercial real estate and has been a licensed California broker and a licensed New York real estate agent. He is also the founder and host of CRE Radio & TV, an online commercial real estate magazine since 2010 and recently founded the Las Vegas Business Journal, an online, media rich, interactive business magazine. For more information, contact Howard at 702.706.4433 or at firstname.lastname@example.org.