The Cause and Consequences of the Retail Apocalypse

[sinkingfeeling]

https://newrepublic.com/article/145813/cause-consequences-retail-apocalypse

This is an older article, but in view of the Toys R Us closings, people need to understand what's looking in the near future.


The Macy’s near my house is closing early next year. The mall where it’s located has seen less and less foot traffic over the years, and losing its anchor store could set off a chain reaction. Cities across the country are facing this uncertainty, with over 6,700 scheduled store closings; it’s become known as the retail apocalypse.

This story is at odds with the broader narrative about business in America: The economy is growing, unemployment is low, and consumer confidence is at a decade-long high. This would typically signal a retail boom, yet the pain rivals the height of the Great Recession. RadioShack, The Limited, Payless, and Toys“R”Us are among 19 retail bankruptciesthis year. Some point to Amazon and other online retailers for wrestling away market share, but e-commerce sales in the second quarter of 2017 only hit 8.9 percent of total sales. There’s still plenty of opportunity for retail outlets with physical space.

Billions of dollars of this debt comes due in the next few years. “If today is considered a retail apocalypse,” Bloomberg reported, “then what’s coming next could truly be scary.” Eight million American retail workers could see their careers evaporate, not due to technological disruption but a predatory financial scheme. The masters of the universe who devised it, meanwhile, will likely walk away enriched, and policymakers must reckon with how they enabled the carnage.

[Agschmid]

1. Notice...

Most of the ones not making were taken private, and were very leveraged by those private companies. That model just doesn’t work.

[Wellstone ruled]

2. Bloomberg has been reporting

about the unsustainable debt that can not be serviced by today's Retail Stores. Now with interest rates creeping up ward,this disaster will happen sooner than later.

The only winner with Toys R Us was Bain Capital and their mining every dime out of this company via leveraged debt.

Macy's is in the same position.

[Bradshaw3]

3. This: "only winner with Toys R Us was Bain Capital and their mining every dime out of this company"

Yep, along with newspapers and several other industries. Just predatory business practice on a huge scale that bring nothing to an economy but joblessness, bankruptcy, and economic instability.

[Wellstone ruled]

5. Caught the story on Macy's

published via Bloomberg a few weeks back. The Buyout Corporation that was formed to purchase Macy's did not put a dime into the deal. Federated got their money,and the whole deal was financed by junk bonds at a Stupid interest rate.

This whole deal was a shame,but easy money made it happen. Sure feel for all those employees who will be out of jobs next year.

[3Hotdogs]

6. Maybe if enough buyers of the junk bonds get burned, this will stop.

[Wellstone ruled]

7. Under the new Tax Bill,

hundred percent write off.

[Agschmid]

4. Yup.