Tuesday, February 18, 2014

The Future of Nonstore Retail Sales (Musical Tribute)

The following chart shows annual nonstore retail sales as a fraction of total retail sales (excluding food services).

Click to enlarge.

The growth trend is extrapolated out to 2050. I'm simply showing what the future will look like if the current trend continues. If 10% causes shopping mall pain now (which it clearly does), then what would 20% do in just 17 more years? Or 40% just 17 years after that?

A 4.2% growth rate means that the thing growing doubles every 17 years. In this case, that thing is shopping mall pain.

If you get stung by a bee and every 17 seconds you get stung by twice as many, how many minutes will it take before you realize that you're standing on a bee hive? How's that for optimism?

The following chart shows retail employees as a fraction of all nonfarm employees.

Click to enlarge.

Although there has been recent illusionary relative strength brought on by misplaced faith in the Fed to heal all that ails us, I fully expect the downward trend in red to continue. Further, I do not expect the blue trend line to offer any meaningful support to halt the decline.

February 26, 2013
The Death of the American Mall and the Rebirth of Public Space

Now the ten massive REITs that own most of America’s malls are unwilling to invest the capital to reinvigorate older properties. Bloomberg reports that the biggest REITs – including General Growth Properties, which declared bankruptcy during the financial crisis – are recovering and growing by divesting themselves of old, less prosperous malls and concentrating on the most profitable.

Our older less prosperous economy is divesting itself of older less prosperous malls? Shocking.

Source Data:
St. Louis Fed: Custom Chart #1
St. Louis Fed: Custom Chart #2


Rob Dawg said...

The postman just left 6 100w equivalent LED spotlights. $22.86 delivered. The Home Despots want $32 each. I have enough to ROI in about 18 months and the HD has inventory that will never move.

Stagflationary Mark said...

Rob Dawg,

The Home Despots? Hahaha! You know I love puns.

You got an awesome price. I need to look into that once I burn through my fluorescent inventory. It too was a great ROI. Might be time to do it again by converting to LED.

I will share a similar story involving batteries.

I bought a large supply of button cell batteries online a few years ago. They were so incredibly cheap. I got 10 of them for the same price "Radio Shackles" wanted to charge me for just one.

September 16, 2007
Edifice Complex

Then there's the RadioShack story. I could not understand why a struggling business (in my opinion) would be building itself a new corporate shrine. "Shrine" is also my opinion. Take a look at the pictures and description. Decide for yourself.

The stock closed today at $2.58, down from its adjusted closing price of $20.29 on September 16, 2007 (adjusted for dividends and splits).

Rob Dawg said...

My point remains that pretty much groceries are the only brick and mortar remaining viable sector. By that feel free to add pre-positioned lumber and maybe, maybe certain categories of clothing. You know stuff that borders on commodity or carries an expiration date.

Stagflationary Mark said...

Rob Dawg,


If I am any indicator, even traditional grocery stores are in trouble though. I hit the chain stores just for the doorbuster sales each week and buy the rest at Costco and Sam's Club each month (neither Costco nor Sam's Club need as many employees per dollar of goods sold).

The worst part for traditional grocery store chains is that the more people who do what I do, the more they have to charge the rest just to stay viable. Charging people more converts more people into shopping at Costco and Sam's Club though. Go figure.

Stagflationary Mark said...

Here's what I'm talking about.

Grocery Store Sales / Total Retail Sales

Anonymous said...

Not everyone can do what you do. If you eat a lot of perishables, Costco is not much help in price savings (and often not a savings).

Stagflationary Mark said...


I agree that Costco and Sam's Club are not the best places to buy fresh produce. I should have mentioned that we buy bananas, lettuce, apples, and what not at grocery stores too (generally whatever is on sale, we're not that picky).

That said, the bulk of our purchases are made at Costco, then Sam's Club, and lastly the grocery store.

I would also point out that there's a reason why the produce section of grocery stores is generally a smaller fraction of the floor space. Most people clearly don't eat a lot of fresh produce.

I wish I could say that we were an exception to that rule. We should definitely eat more produce than we do. It isn't the cost that's stopping us, although cost may be stopping some.

Anonymous said...

I just have toddlers who eat milk and fruit by the bushel. Costco never has competitive prices to the nearest local store for those things.

We do buy in bulk, but it's things like whole animals from a local farmer. I wonder how much of that is hidden as barter transactions, though. Probably a few percent at least.

Stagflationary Mark said...


We do buy in bulk, but it's things like whole animals from a local farmer.

We thinking about buying meat in bulk like that and putting it into our freezer.

As you point out, Costco's price advantage fails there.

That said, we find plenty at Costco that is much cheaper (in bulk) than our nearby grocery stores.

Stagflationary Mark said...

Ack. We "keep" thinking. I lost a word.