The Retail Death Rattle

Tyler Durden's picture

Submitted by Jim Quinn of The Burning Platform blog,

“I was part of that strange race of people aptly described as spending their lives doing things they detest, to make money they don’t want, to buy things they don’t need, to impress people they don’t like.” - Emile Gauvreau

If ever a chart provided unequivocal proof the economic recovery storyline is a fraud, the one below is the smoking gun. November and December retail sales account for 20% to 40% of annual retail sales for most retailers. The number of visits to retail stores has plummeted by 50% since 2010. Please note this was during a supposed economic recovery. Also note consumer spending accounts for 70% of GDP. Also note credit card debt outstanding is 7% lower than its level in 2010 and 16% below its peak in 2008. Retailers like J.C. Penney, Best Buy, Sears, Radio Shack and Barnes & Noble continue to report appalling sales and profit results, along with listings of store closings. Even the heavyweights like Wal-Mart and Target continue to report negative comp store sales. How can the government and mainstream media be reporting an economic recovery when the industry that accounts for 70% of GDP is in free fall? The answer is that 99% of America has not had an economic recovery. Only Bernanke’s 1% owner class have benefited from his QE/ZIRP induced stock market levitation.

The entire economic recovery storyline is a sham built upon easy money funneled by the Fed to the Too Big To Trust Wall Street banks so they can use their HFT supercomputers to drive the stock market higher, buy up the millions of homes they foreclosed upon to artificially drive up home prices, and generate profits through rigging commodity, currency, and bond markets, while reducing loan loss reserves because they are free to value their toxic assets at anything they please – compliments of the spineless nerds at the FASB. GDP has been artificially propped up by the Federal government through the magic of EBT cards, SSDI for the depressed and downtrodden, never ending extensions of unemployment benefits, billions in student loans to University of Phoenix prodigies, and subprime auto loans to deadbeats from the Government Motors financing arm – Ally Financial (85% owned by you the taxpayer). The country is being kept afloat on an ocean of debt and delusional belief in the power of central bankers to steer this ship through a sea of icebergs just below the surface.

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 most amazingly delusional aspect to the chart above is retailers continued to add 44 million square feet in 2013 to the almost 15 billion existing square feet of retail space in the U.S. That is approximately 47 square feet of retail space for every person in America. Retail CEOs are not the brightest bulbs in the sale bin, as exhibited by the CEO of Target and his gross malfeasance in protecting his customers’ personal financial information. Of course, the 44 million square feet added in 2013 is down 85% from the annual increases from 2000 through 2008. 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.

The impact of this retail death spiral will be vast and far reaching. A few factoids will help you understand the coming calamity:

  • There are approximately 109,500 shopping centers in the United States ranging in size from the small convenience centers to the large super-regional malls.
  • There are in excess of 1 million retail establishments in the United States occupying 15 billion square feet of space and generating over $4.4 trillion of annual sales. This includes 8,700 department stores, 160,000 clothing & accessory stores, and 8,600 game stores.
  • U.S. shopping-center retail sales total more than $2.26 trillion, accounting for over half of all retail sales.
  • The U.S. shopping-center industry directly employed over 12 million people in 2010 and indirectly generated another 5.6 million jobs in support industries. Collectively, the industry accounted for 12.7% of total U.S. employment.
  • Total retail employment in 2012 totaled 14.9 million, lower than the 15.1 million employed in 2002.
  • For every 100 individuals directly employed at a U.S. regional shopping center, an additional 20 to 30 jobs are supported in the community due to multiplier effects.

The collapse in foot traffic to the 109,500 shopping centers that crisscross our suburban sprawl paradise of plenty is irreversible. No amount of marketing propaganda, 50% off sales, or hot new iGadgets is going to spur a dramatic turnaround. Quarter after quarter there will be more announcements of store closings. Macys just announced the closing of 5 stores and firing of 2,500 retail workers. JC Penney just announced the closing of 33 stores and firing of 2,000 retail workers. Announcements are imminent from Sears, Radio Shack and a slew of other retailers who are beginning to see the writing on the wall. The vacancy rate will be rising in strip malls, power malls and regional malls, with the largest growing sector being ghost malls. Before long it will appear that SPACE AVAILABLE is the fastest growing retailer in America.

The reason this death spiral cannot be reversed is simply a matter of arithmetic and demographics. While arrogant hubristic retail CEOs of public big box mega-retailers added 2.7 billion retail square feet to our already over saturated market, real median household income flat lined. The advancement in retail spending was attributable solely to the $1.1 trillion increase (68%) in consumer debt and the trillion dollars of home equity extracted from castles in the sky, that later crashed down to earth. 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. With real median household income 8% lower than it was in 2008, the collapse in retail traffic is a rational reaction by the impoverished 99%. Americans are using their credit cards to pay their real estate taxes, income taxes, and monthly utilities, since their income is lower, and their living expenses rise relentlessly, thanks to Bernanke and his Fed created inflation.

The media mouthpieces for the establishment gloss over the fact average gasoline prices in 2013 were the second highest in history. The highest average price was in 2012 and the 3rd highest average price was in 2011. These prices are 150% higher than prices in the early 2000′s. This might not matter to the likes of Jamie Dimon and Jon Corzine, but for a middle class family with two parents working and making 7.5% less than they made in 2000, it has a dramatic impact on discretionary income. The fact oil prices have risen from $25 per barrel in 2003 to $100 per barrel today has not only impacted gas prices, but utility costs, food costs, and the price of any product that needs to be transported to your local Wally World. The outrageous rise in tuition prices has been aided and abetted by the Federal government and their doling out of loans so diploma mills like the University of Phoenix can bilk clueless dupes into thinking they are on their way to an exciting new career, while leaving them jobless in their parents’ basement with a loan payment for life.


The laughable jobs recovery touted by Obama, his sycophantic minions, paid off economist shills, and the discredited corporate legacy media can be viewed appropriately in the following two charts, that reveal the false storyline being peddled to the techno-narcissistic iGadget distracted masses. There are 247 million working age Americans between the ages of 18 and 64. Only 145 million of these people are employed. Of these employed, 19 million are working part-time and 9 million are self- employed. Another 20 million are employed by the government, producing nothing and being sustained by the few remaining producers with their tax dollars. The labor participation rate is the lowest it has been since women entered the workforce in large numbers during the 1980′s. We are back to levels seen during the booming Carter years. Those peddling the drivel about retiring Baby Boomers causing the decline in the labor participation rate are either math challenged or willfully ignorant because they are being paid to be so. Once you turn 65 you are no longer counted in the work force. The percentage of those over 55 in the workforce has risen dramatically to an all-time high, as the Me Generation never saved for retirement or saw their retirement savings obliterated in the Wall Street created 2008 financial implosion.

To understand the absolute idiocy of retail CEOs across the land one must parse the employment data back to 2000. In the year 2000 the working age population of the U.S. was 213 million and 136.9 million of them were working, a record level of 64.4% of the population. There were 70 million working age Americans not in the labor force. Fourteen years later the number of working age Americans is 247 million and only 144.6 million are working. The working age population has risen by 16% and the number of employed has risen by only 5.6%. That’s quite a success story. Of course, even though median household income is 7.5% lower than it was in 2000, the government expects you to believe that 22 million Americans voluntarily left the labor force because they no longer needed a job. While the number of employed grew by 5.6% over fourteen years, the number of people who left the workforce grew by 31.1%. Over this same time frame the mega-retailers that dominate the landscape added almost 3 billion square feet of selling space, a 25% increase. A critical thinking individual might wonder how this could possibly end well for the retail genius CEOs in glistening corporate office towers from coast to coast.

This entire materialistic orgy of consumerism has been sustained solely with debt peddled by the Wall Street banking syndicate. The average American consumer met their Waterloo in 2008. Bernanke’s mission was to save bankers, billionaires and politicians. It was not to save the working middle class. You’ve been sacrificed at the altar of the .1%. The 0% interest rates were for Jamie Dimon and Lloyd Blankfein. Your credit card interest rate remained between 13% and 21%. So, while you struggle to pay bills with your declining real income, the Wall Street bankers are again generating record profits and paying themselves record bonuses. Profits are so good, they can afford to pay tens of billions in fines for their criminal acts, and still be left with billions to divvy up among their non-prosecuted criminal executives.

Bernanke and his financial elite owners have been able to rig the markets to give the appearance of normalcy, but they cannot rig the demographic time bomb that will cause the death and destruction of our illusory retail paradigm. Demographics cannot be manipulated or altered by the government or mass media. The best they can do is ignore or lie about the facts. The life cycle of a human being is utterly predictable, along with their habits across time. Those under 25 years old have very little income, therefore they have very little spending. Once a job is attained and income levels rise, spending rises along with the increased income. As the person enters old age their income declines and spending on stuff declines rapidly. The media may be ignoring the fact that annual expenditures drop by 40% for those over 65 years old from the peak spending years of 45 to 54, but it doesn’t change the fact. They also cannot change the fact that 10,000 Americans will turn 65 every day for the next sixteen years. They also can’t change the fact the average Baby Boomer has less than $50,000 saved for retirement and is up to their grey eye brows in debt.

With over 15% of all 25 to 34 year olds living in their parents’ basement and those under 25 saddled with billions in student loan debt, the traditional increase in income and spending is DOA for the millennial generation. The hardest hit demographic on the job front during the 2008 through 2014 ongoing recession has been the 45 to 54 year olds in their peak earning and spending years. Combine these demographic developments and you’ve got a perfect storm for over-built retailers and their egotistical CEOs.

The media continues to peddle the storyline of on-line sales saving the ancient bricks and mortar retailers. Again, the talking head pundits are willfully ignoring basic math. On-line sales account for 6% of total retail sales. If a dying behemoth like JC Penney announces a 20% decline in same store sales and a 20% increase in on-line sales, their total change is still negative 17.6%. And they are still left with 1,100 decaying stores, 100,000 employees, lease payments, debt payments, maintenance costs, utility costs, inventory costs, and pension costs. Their future is so bright they gotta wear a toe tag.

The decades of mal-investment in retail stores was enabled by Greenspan, Bernanke, and their Federal Reserve brethren. Their easy money policies enabled Americans to live far beyond their true means through credit card debt, auto debt, mortgage debt, and home equity debt. This false illusion of wealth and foolish spending led mega-retailers to ignore facts and spread like locusts across the suburban countryside. The debt fueled orgy has run out of steam. All that is left is the largest mountain of debt in human history, a gutted and debt laden former middle class, and thousands of empty stores in future decaying ghost malls haunting the highways and byways of suburbia.

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. Real estate developers will be going belly-up and the banking sector will be taking huge losses again. I’m sure the remaining taxpayers will gladly bailout Wall Street again. The facts are not debatable. They can be ignored by the politicians, Ivy League economists, media talking heads, and the willfully ignorant masses, but they do not cease to exist.

“Facts do not cease to exist because they are ignored.”Aldous Huxley

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hedgeless_horseman's picture



“I was part of that strange race of people aptly described as spending their lives doing things they detest, to make money they don’t want, to buy things they don’t need, to impress people they don’t like.” ?

Me too!  I changed that. 

One of the ways is that I read this excellent book, On Writing: 10th Anniversary Edition: A Memoir of the Craft, by Stephen King, then I started writing.

A second thing I did is read this incredible book, Born To Run, by Chris McDougall, then I started trail running 3-4 times per week.

Finally, I cancelled my credit cards, and stopped drinking.

Seasmoke's picture

Guess Emile, never hung out at ZeroHedge....

Almost Solvent's picture

The sheer tonnage of sunk/lost time & materials to build all these awesome big box stores and strip malls is stunning.

Just like China's empty cities, we have (future empty) box stores/strip malls that can be repurposed. 

cifo's picture

I just finished "Born to run". One of the most inspirational books I read.

gmrpeabody's picture

" and stopped drinking"


Lost me...

prains's picture

....while in the act of running

SafelyGraze's picture

foot traffic is so old-economy

nowdays, the retail comes to the consumer

whether by usps or courier

and soon, by economical autonomous drone

it is a great time to retail!

the bezos family of retailers


BLOTTO's picture

SRT: How shall the new environment be programmed? It all happened so slowly that most men failed to realize that anything had happened at all.


OMM: Let us be thankful we have commerce. Buy more. Buy more now. Buy. And be happy.



duo's picture

Isn't resisting the urge to buy crap you don't need with money you don't have what "Fight Club" was all about?

A Nanny Moose's picture

"The things you own, end up owning you."

MeMadMax's picture



It's not entirely because the middle class is out of money, it's a big part but not the entire picture...


It's because the internet has made it cheaper and more convienient.


Why stand in huge lines where you could get mugged, raped, shot, etc for your cheap chinese junk when you can just hop on Amazon and get your crap in the comfort of your own home?

cynicalskeptic's picture

Larger Picture:

We're measuring CONSUMPTION now in place of PRODUCTION.  Production of goods and services - the addition of 'value' is what creates wealth.  Dig ore out of the ground, smelt it into metal, make somethign out of the metal.  Cut down trees, turn them into lumber and plywood, turn the wood into products like furniture.  Grow grain, mill it into flour, bake bread.  At each stage you add value along with the labor expended.  Higher value is added at the end, lesser at the beginning.  Third world countries mine ore and cut trees.    The US is reverting to third-world status.

If a nation does not produce wealth, does not add value, it can no longer afford to CONSUME.   The US has many high earners who are simply taking pieces of existing value NOT adding any.   Banking, finance - all thsoe activities SHOULD exist to allocate capital to PRODUCTIVE endeavors.  Today they are leeches killing off any industry that still creates value.  A 'service' economy - be it 'entertainment', 'software' or plai old retail and food service needs others who have money to pay for those services.

So - the question becomes - Where is 'value' created or added now in the US?  Where is the wealth being created to pay for the consumption?  Answer - nowhere.  Consumption has been fed by increased debt and THAT is coming to an end.

If nobody is working and creating or adding value, nobody has funds to buy ANYTHING.  

A wealthy 0.1% cannot possibly consume the same amount as a healthy 99%   When the 7 Walmart heirs are worth more than the whole bottom 40% of the US population, somethign is VERY wrong.  In the past, during the Robber Baron era, income disparity was bad (though not AS bad) but the Robber Barons built railroard, steel mills and factories.  The CREATED REAL WEALTH and employed others.  Today's rich simply suck money out of the rest of the population.  WalMart is selling goods made elsewhere (Creatign wealth in China) and paying less than subsistence wages to those who work in their stores (many of whom depend on government aid to get by).

You can fake GDP for a while when consumption is debt fed but eventiually the lie becomes obvious.  The US is faking statistics all around - understating inflation (aother way of boosting GDP), redefining components of statistics (affecting GDP and CPI) and vastly understating Unemployment (Now past the 1932 high of 23%) - all in a desperate effort to hide the effects of failed government policies.  'Free Trade' and endless pursuit of the cheapest possible labor has destroyed the US economy.  Some saw it coming - like Perot and Sir James Goldsmith in the following:

ATM's picture

We have ceased being citizens and are now simply referred to as consumers. And nobody but a few noticed the difference.

Manthong's picture

wow.. I dunno about that stop drinking thing...

Maybe it helps the toleration of the +155 db (A) wife.  :-D.

As an old rock and roller, I do not mind the sound pressure level..

it's the amplitude at 7 KHz that gets a bit annoying.

.. :-) sweetie, you will never see this little dig, but I love you anyway.

mjcOH1's picture

"it is a great time to retail!

the bezos family of retailers"


Proving daily that there's great money in making no money.

GetZeeGold's picture





Welcome to the RecoveryTM


Pick a greenchute...this must be just like living in paradise.


tvdog's picture

We have ceased being citizens and are now simply referred to as consumers. And nobody but a few noticed the difference.

When buying - consumers, when working - human resources. In either case, not human beings.

rbg81's picture

As real wealth has declined, we have created the illusion of wealth by putting everything on the National credit card.  Even 10-20 years ago, the Government hired people to work, either directly or though contractor proxies.  Now, thanks to the wisdom of individuals such as Nancy Pelosi, they just give the $$ directly to the client.

This will end badly.  When the collapse really comes, it will make the Zombie Apocalypse look tame.

AldousHuxley's picture

what Pelosi gives come right back to her husband's construction company via commercial rents from businesses that sell to her voters.

spinone's picture

the dominant paridigm defines the language of the arguement.

vulcanraven's picture

"You are not your fuckin khakis."

NOTW777's picture

"was" being the operative word

Herd Redirection Committee's picture

So wait a second, HH is Jim Quinn?


BLOTTO         In "THX 1138" all citizens were heavily drugged and told to buy and be happy. Perhaps TPTB will soon require all citizens to take their meds and shop til they drop.

ATM's picture

I think they already do.

delacroix's picture

drug evasion was a crime, which led to sex which also was a crime

Keyser's picture

Who would have thought that George's Lucas' first feature film would have been so prophetic. 


scrappy's picture

So much sunk capital...Perhaps families should move in with housing in the back, a retail "store" with whatever they craft, and a green roof garden and solar for the new "Mall Community".

klockwerks's picture

Scrappy, great idea. Once they start closing up, buy the whole center and covert to apts to rent. Zoning might be an issue and time consuming but good idea

Ronaldo's picture

Parking would be the shit!

7 of 15's picture

Like Dan Tanna in the TV show Vega$

7 of 15's picture

Like Dan Tanna in the TV show Vega$

goldinpenguin's picture

Amen , more clicks less bricks.


bad news indeed for retailers serving lower income customers who have been slow to "get it" with online price comparison and shopping. I don't know how Radio Shack has survived but JCP, Sears, Kmart are pretty much doomed to bankruptcy.

JCP should just change it's name to 50% OFF Inc 

johngaltfla's picture

Exactly Graze. Who the hell wants to put up with zombie clerks lying about how great their bullshit is. I went into Best Buy to find a cheap, common, commodity computer accessory and the assholes actually said, "well, we don't sell it here but we can log in online for you and order it." I told the zit faced moron that if I had intended to do that, I would have done that at 4 a.m. when I wake up while drinking my coffee and still in my boxers and via Amazon where it is shipped to you usually intact. The clueless wonder could not understand why I would not come into their shitty store if I had not intended to order something online!!!?!?!?!?!!?!?

Withdrawn Sanction's picture

Did he offer you the extended warranty service contract?

johngaltfla's picture

Yes, but no blowjob to make it worth the $29.95 per year.

Blue Boat's picture

Yea really, SG.

Measuring store foot traffic in the 21st century as an accurate indicator of retail health?

Good Gawd......can you say "online retailing?"

Whereas there is some other merit in the article, the initial premise is stupid!

ironsky's picture

"The media continues to peddle the storyline of on-line sales saving the ancient bricks and mortar retailers. Again, the talking head pundits are willfully ignoring basic math. On-line sales account for 6% of total retail sales. If a dying behemoth like JC Penney announces a 20% decline in same store sales and a 20% increase in on-line sales, their total change is still negative 17.6%."

willwork4food's picture

I quit for 20 years. Got cancer, got cured but finally and decided wtf? I take it easy now.

 Kudos to HH!!! Say hello to Bill.

Fail2Deliver's picture

Me too! The ice kept falling out of my glass.

U4 eee aaa's picture

That's why they invented sippy cups

HowardBeale's picture

"...while in the act of running"

Don't need to get extreme. Join the Hash House Harriers, whose motto is: Drinkers with a running problem. 

Agent P's picture

I stopped drinking.....well, except for beer, wine, whiskey, vodka tonics, and the occasional margarita.

linrom's picture

I was reading his posts, he could've fooled me? Start drinking!

max2205's picture

Didn't I read and hear the same shit in 2005 6 7 8 9 10 11 12 13?

Blano's picture

Then just do the first 3 and call it a day.