A Look At America's Retail Apocalypse In Charts

Tyler Durden's picture

While everyone likes to point the finger at Amazon, the growing retail apocalypse in America can't be tied to just one catalyst.  Certainly, there is no doubt that Amazon is taking a toll on brick-and-mortar retailers but massive excess capacity, perpetually over-levered capital structures and a constant lack of capital investment have undoubtedly helped accelerate the decline. 

As Bloomberg points out today, up until this year, struggling retailers have largely been able to avoid bankruptcy by refinancing to buy more time. Alas, as evidenced by the Toys "R" Us bankruptcy, investor demand for retail debt has waned of late resulting in a whole slew of recent retail failures.

Meanwhile, investor distaste for retail debt comes just as the industry faces a massive wave of maturities over the next five years.

Making matters more difficult is the explosive amount of risky debt owed by retail coming due over the next five years. Several companies are like teen-jewelry chain Claire’s Stores Inc., a 2007 leveraged buyout owned by private-equity firm Apollo Global Management LLC, which has $2 billion in borrowings starting to mature in 2019 and still has 1,600 stores in North America.

 

Just $100 million of high-yield retail borrowings were set to mature this year, but that will increase to $1.9 billion in 2018, according to Fitch Ratings Inc. And from 2019 to 2025, it will balloon to an annual average of almost $5 billion. The amount of retail debt considered risky is also rising. Over the past year, high-yield bonds outstanding gained 20 percent, to $35 billion, and the industry’s leveraged loans are up 15 percent, to $152 billion, according to Bloomberg data.

 

Even worse, this will hit as a record $1 trillion in high-yield debt for all industries comes due over the next five years, according to Moody’s. The surge in demand for refinancing is also likely to come just as credit markets tighten and become much less accommodating to distressed borrowers.

So, who has been hit the hardest so far?  Not surprisingly, mall-based apparel retailers and department stores alone account for nearly half of the 6,752 store closures so far this year.

Now that boom is finally going bust. Through the third quarter of this year, 6,752 locations were scheduled to shutter in the U.S., excluding grocery stores and restaurants, according to the International Council of Shopping Centers. That's more than double the 2016 total and is close to surpassing the all-time high of 6,900 in 2008, during the depths of the financial crisis. Apparel chains have by far taken the biggest hit, with 2,500 locations closing. Department stores were hammered, too, with Macy’s Inc., Sears Holdings Corp. and J.C. Penney Co. downsizing. In all, about 550 department stores closed, equating to 43 million square feet, or about half the total.

Meanwhile, given the number of real estate delinquencies sprinkled around the country, the store closure counts above will undoubtedly only continue to grow.

Of course, the wave of retail failures is a direct hit to an industry that is the largest employer of young Americans and those at the low end of the income spectrum with retail employment drastically lagging overall private job growth.

States like Ohio, West Virginia, Michigan and Illinois have been among the hardest hit, with retail employment declining over the past decade, and now those woes are likely to spread. Many states, such as Nevada, Florida and Arkansas, have overly relied on retail for job growth, so they could feel more pain as the fallout deepens.

Meanwhile, exposure to low-end retail jobs varies by state with Alabama, Louisiana, New Hampshire, Mississippi and South Carolina having the highest concentration of cashiers, who have an average wage of $21,500 a year. On a regional basis, Bloomberg notes that Washington Parish north of New Orleans has a higher percentage than anywhere in the country, at twice the national average.

Conclusion: All of America's mall REITs are going to need a lot more high schools and doctor offices to fill their vacant spaces unless they want to meet the same fate as this once-bustling mall in Ohio...

Mall

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Donald J. Trump's picture

I could use a good swirl o graph.

Ajax-1's picture

Ahh yes, Clackers. It was all the rage in 1971. As mom would always remind us: "It's all fun and games until someone loses an eye".

Automatic Choke's picture

then it is time to play "find the eyeball"

El Oregonian's picture

Retrofit these malls to community housing units with walkways like sidewalks, indoor trees- Park settings- benches, etc. They could be all enclosed with access-only resident cards. A sealed community neighborhood with loads of parking outside the malls in the parking lots.

WINNING!

tymwltl's picture

Is dope legal to use in OR. ?

El Oregonian's picture

Hey, its better than watching these rotting away and in disrepair. Think outside the box? And yeah, the ganja be legal here.

44magnum's picture

One of the benefits of Weed is it makes you think, that's one reason why its against the law

Pernicious Gold Phallusy's picture

You can be 100% certain that 30% of it would be reserved for Section  8.

Kobe Beef's picture

and then the same feral subspecies that wrecked the first mall gets another go at the 2nd.

peopledontwanttruth's picture

When the giant consumer nation can no longer consume, what does this tell ya? Only a matter of time the countries like China, Indonesia, Vietnam and others who produce will no longer get orders. The counties that provide the raw product will no longer get orders.
Billions starving and restless.

Why is it they want this war again?

HRClinton's picture

"I could use a good swirl o graph."

I just made one.  It did not end well. Well...

it ended with a Reset.

rccalhoun's picture

rezone and turn it into housing

RafterManFMJ's picture

Looks like a great place to shoot a zombie film!

Abbie Normal's picture

George Romero already did that in Dawn of the Dead.

When asked why he chose a shopping mall as the setting, it was because the mall was important when these people were alive; so they continue to gather there as zombies.

RafterManFMJ's picture

Yea I;m from the area and new the first part but not the second - thanks!

max2205's picture

They can all work for Dr's.  

cbxer55's picture

There is a yuge abondoned mall one mile away from where I live. Serves as a constant reminder that things aren't as great as we are being told by TPTB. Makes me sad seeing it practically every day, more than once. There's another only a few miles away. Yet the Open Air mall three miles away thrives. Or does it. Went to eat at a Mutt's hot dog joint the other day, closed for good. Sad, wanted a hot dog loaded with mustard and sauer kraut. RATS!!!

shankster's picture

I was just at that Mall last weekend too...great pretzels right there next to the Hadi's gold chain store.

shankster's picture

Turn them into robot making facilities.

buzzsaw99's picture

sorry but that mall was always sucky and small and claws stro fobic from the looks of it.

SilverDOG's picture

Retail gotta die.

We all gonna be shopping at the Company Store, AMAZON/CIA/WHOLEFOODS/EBT.

Save up for the padded anklet.

RedBaron616's picture

There's plenty of choices out there other than Amazon. I never buy from them.

SilverDOG's picture

Neither do I, nor Mordor, aka Wal-Mart.

Few we are.

 

Herdee's picture

Grow hydroponic vegetables there.

Ajax-1's picture

Turn it into a huge whorehouse.

RedBaron616's picture

A lot of us are sick and tired of dealing with traffic, limited selection, lousy customer service, and high prices so what do we do? We buy online. I never buy from Amazon either.  I do almost all my Christmas shopping online. 

So stop the usual "the sky is falling" just because many of us would much rather pick up our packages at our doorstep then make a pilgrimage to the local retailer only to either not find what we are looking for or paying too much for it.  75% of all retailers can fail and it won't bother me a bit. 

_triplesix_'s picture

Christmas shopping??  Do people without kids still do that?

cheech_wizard's picture

The last time I did that was years ago. I was done in under an hour.

Something about making a list, checking it twice, and plotting the most expedient route through the mall.

The real bitch was parking.

 

 

Pernicious Gold Phallusy's picture

 Nothing is too good for my family. That's why, for Christmas, they're getting nothing.

Refuse-Resist's picture

Think of all the $9 per hour part time jobs that will be lost -- the Apocalypse.

 

DaBard51's picture

Wal-Mart killed K-Mart, Sears walk-in; Amazon killed catalog.

How many Craftsman sets, need you?  How many Kenmore washer/dryer combos?

 

 

When nine hundred years old you become, look this good you will not.

Manipuflation's picture

Sears brought the print catalog back this year.  Get them while you can because those will be the last ones you will ever see.  I hear they are quite thin.

guru69's picture

You've got to get professional help to cure your speech impediment.

Erwin643's picture

At least you don't jerk off to Roger Moore, like one particular ZH'er pervert does.

Manipuflation's picture

Well, I had the big interview yesterday and they already called me back.  I'm in and it is in retail but management retail.  Now I just have to wait for the offer and agree to it and go pee some Everclear into a cup.  We'll see what the offer says but I've already seen the minimums and they are not bad at all.  They prorate that salary on the years of management and I have 18 years of that sort of experience.  Top end would be awesome with Mrs. M making fiats.

I am a ZHer though and can't help but wonder if it all just a big scam to get people hired for the holiday season.  What if the fine print in the offer says something like, "Actual offer to be made after Jan 1 2018"?  I doubt that will be the case based on what I have had to go through so far but you never know.

At any rate, here we go again.  Better than Sears I can tell you that much.    

 

Dancing Disraeli's picture

Good luck.  I hope it goes well.

Manipuflation's picture

Thanks.  I think I might have to wear a suit and tie a lot though.  It's going to be very different for me but I am going to have to make it work because the pay is there; MOAR than I have ever made along with all the benefits and profit sharing.  I'll do the best I can.   

RAT005's picture

Keep moving forward Mani, good luck to you.  What is the basic product line?  Here's an idea maybe you can spin relative to what you are doing.

I found the bartender/stripper business story fascinating.  The strippers are the business but the bartenders are the glam.  The strippers can't market themselves because they might be students, teachers, mothers, etc. and well stripping is dirty business in USA.  The bartenders can market themself because because being just a little big respectable and surrounded by naked women for more attraction is marketable.  The bartenders market themself and the club as measured by their Soc. Media following and such.  The owners pay them for the following and their ability to build club business.  Besides what the bartenders might steal from the strippers, the bartenders net more than the strippers and the strippers have to pay the club owner!

So figure out how to be hot bartender and build your retail club that it is filled with commodity retail stuff that really can't market itself.

Manipuflation's picture

I prefer not to answer at this time. 

StagStopa's picture

Lol. "Retail management". Fucking joke. Probably walmart. They're desperate for warm bodies for "management". 

 

These fucks couldn't manage a lemonade stand. 

Yeah, wait for the first of the year...sucker.

MuffDiver69's picture

Yah think

“Certainly, there is no doubt that Amazon is taking a toll on brick-and-mortar retailers but massive excess capacity, perpetually over-levered capital structures and a constant lack of capital investment have undoubtedly helped accelerate the decline.

Manipuflation's picture

There is one brick and mortar operation out there who is not falling behind the times and no one has named them yet. 

StagStopa's picture

You're wrong.. Walmart is running scared. they do not know what to do about Amazon.

 

they are throwing everything they've got against the wall to see what's going to stick. their biggest problem is there software and systems are so Antiquated and Patched together. Legacy crap from the 70s.

 

You'll see

TRM's picture

Grow ops!! Seriously and not just pot (but do that where it is legal)

https://www.youtube.com/watch?list=PLK2LsIp0FxT9uCrMJTzo7zYJiekrQ5gNo&v=...

10,000 heads of lettuce a day. Lots of entry level picking and other jobs available.

Bwana's picture

I don't think anybody is looking at the whole picture. 1. Americans on the whole haven't had a meaningful raise in pay since 2000. 2. The era from 2008 to 2016 was very inflationary regardless of what the government says. 3. We now have 78% of the adults in this country living paycheck to paycheck and unable to cover a surprise $400. expense. 4. The average person has $16,000 on their credit cards. 5. Add up 1-4 and you will realize Americans are broke, they are living hand to mouth and they can't afford the gas to drive to a store or buy anything once they get there. All of the internet sales only amount to 6.5% of the total sales. I still have a good job but since I have no write off my tax burden is well over 60% according to the accountant I use. I track my prices and food alone is up 50 to 60%. Ground beef went from $1.99 to 5.99 a pound in two years. When you buy a box of crackers and instead of it being a pound it is now 14 or 12 ounces at a 50% price increase. Everything is downsized except the price. I went to Chipoltle for dinner and the tortillas are smaller now. So you get a smaller burrito for more money.