So Much for Our Retail-Based Economy…

[Blue Belle]

The Real State of the US Economy
http://www.globalresearch.ca/index.php?context=viewArticle&code=ENG20080802&articleId=9728
http://www.crooksandliars.com/2008/08/04/so-much-for-our-retail-based-economy/

The real economy contracting rapidly

Behind the reassuring statements from Paulson and others that the "worst is over" the reality of the credit collapse since August 2007 is a deepening economic contraction which I have said several times in this space will surpass the Great Depression of the 1929-1938 period. A good friend who is an unemployed homebuilder in a prosperous part of Arizona just sent me the following list of US department retail store closures. It is worth noting that over 70% of the US GDP is consumer spending and that the entire Federal Reserve strategy of Alan Greenspan after the March 2000 collapse of the stock market bubble, was to bring US interest rates to their lowest levels since the 1930’s in order to stimulate consumer spending on credit, i.e. debt, to avoid "recession." Note the scale of the following store closings across America in recent weeks:


Ann Taylor: closing 117 stores nationwide.

Eddie Bauer: to close more stores after closing 27 stores in the first quarter.

Cache: (a women’s retailer) is closing 20 to 23 stores this year.

Lane Bryant, Fashion Bug, Catherines: closing 150 stores nationwide

Talbots, J. Jill: closing stores. Talbots will close all 78 of its kids and men's stores plus another 22 underperforming stores. The 22 stores will be a mix of Talbots women's and J. Jill.

Gap Inc.: closing 85 stores

Foot Locker: to close 140 stores

Wickes Furniture: is going out of business and closing all of its stores. The 37-year-old retailer that targets middle-income customers, filed for bankruptcy protection last month.

Levitz:the furniture retailer, announced it was going out of business and closing all 76 of its stores in December. The retailer dates back to 1910.

Zales, Piercing Pagoda: plans to close 82 stores by July 31 followed by closing another 23 underperforming stores.

Disney Store: owner has the right to close 98 stores.

Home Depot: store closings 15 of them amid a slumping US economy and housing market. The move will affect 1,300 employees. It is the first time the world's largest home improvement store chain has ever closed a flagship store.

CompUSA: (CLOSED).

Macy's: 9 stores closed

Movie Gallery: video rental company plans to close 400 of 3,500 Movie Gallery and Hollywood Video stores in addition to the 520 locations the video rental chain closed last fall as part of bankruptcy.

Pacific Sunwear: 153 Demo stores closing

Pep Boys: 33 stores of auto parts supplier closing

Sprint Nextel: 125 retail locations to close with 4,000 employees following 5,000 layoffs last year.

J. C. Penney, Lowe's and Office Depot: are all scaling back

Ethan Allen Interiors: plans to close 12 of 300 stores to cut costs.

Wilsons the Leather Experts: closing 158 stores

Bombay Company: to close all 384 U.S.-based Bombay Company stores.

KB Toys: closing 356 stores around the United States as part of its bankruptcy reorganization.

Dillard's Inc.: will close another six stores this year.

~~~~~~~~~~~~

Buckle in... it's going to be a bumpy ride.

[Warpy]

1. The real shocker is that Sears might be on the chopping block

along with the more predictable Pier One and Circuit City. Sears might close its stores and concentrate on K-Mart instead because they're overexpanded with both outlets in business and losing money hand over fist.

That's the problem with Depressions, which it looks like we're sliding into. Even if you have a little spare cash and need something, there is no place to buy it.

We're all going to have to learn how to mend, patch, plaster, tie, and tape things together for the duration.

[tavalon]

46. The mending thing is a good skill to have anyway

but that's about the only thing good we can say about what is coming.

[DJ13]

2. Our economy is terminal

Despite the wishes of Wall Street and the GOP, its impossible to lower the wages of the bottom 90% for the last 30 years by killing off our manufacturing base and replacing it with low wage service jobs and expect people to be able to afford to continue living by replacing household income with easy credit.

[Blue Belle]

3. The "E-Z Credit" places...

being owned by most of the largest banks in this country - some of which are teetering right now.

[raccoon]

22. Exactly, DJ! Please consider starting a thread on this.

You don't need to be John Kenneth Galbraith to figure that out. So what part of it does Wall St. and the GOP not get? :shrug:

[tavalon]

47. There's a certain willfulness to it

I wonder if they think they will skate through? They might want to do a quick refresher on their history.

[Quantess]

53. Very interesting question.

It appears that Wall Street is more concerned with immediate profit. And the GOP are shills voting in the best interests of their corporate owners.

[EC]

4. Here's part of the problem with these stores...

I had a job interview at Sears (hiring was frozen again, so no job)but anyway...what I was told in no uncertain terms, Sears is a credit industry, not a retail industry. The retail end is just to sell credit. The main part of a sales job is to make sure people use their Sears charge or signs up for an account. Every one of those stores, has their own charge cards. Once again, as in the Depression, too much paper without real equity behind it.

[Blue Belle]

5. That is true...

I work at Lowe's and they want their staff to encourage the use of their credit cards. You bring up an excellent point.

[4_TN_TITANS]

31. Interesting point....

I know the stores push and push their cards but I never thought of it like that.

[eridani]

37. Why does anybody even have store credit cards anymore?

Back in the 50s, my folks used what were then called Charge-a-Plates, which were specific to individual deparment stores and gasoline merchants. When VISA and MasterCard got common, they and just about everyone else I know of dropped the store-specific cards for the convenience of having all your charges on just one or two bills per month.

[jmowreader]

50. Some store cards make sense...

here I am thinking of "commercial" credit cards.

Home Depot has one, and I would imagine Lowe's has one too. When you buy on a commercial credit card, you can have the cashier enter a job number into the computer. When you get your bill at the end of the month, it's itemized by job number which makes billing your customer very easy.

[eridani]

51. That's for sure something they didn't do in the olden days

I just don't get gas credit cards, though

[Matariki]

6. do you think any of this may be a shift to internet shopping?

as for the decidedly un-hip Sears and J.C. Penney's... I think most of their customers have died off.

[1]

8. i can only speak for myself, but aside from food i buy everything else online...

and i am probably as un-hip as they come.

and by online i mean every website i can search from amazon to ebay.


this is where you probably should hate me. if i can buy a wigit online for half the cost to buy that same wigit at a local store (and pay no taxes on that wigit) i will.

i know.

but what am i supposed to do? drive all over town expending gas to try and find and overpay for a wigit? maybe a substandard wigit?

or not get my wigit at all because i can't afford it?



or do i do what is the very smart thing to me and search the internet for the best (and tax free) wigit i can find?


meats, fruits and vegetables. i am local. everything else? i am online.


is this just the shift in the economy? or am i a bad person?

[lynnertic]

23. you're okay and withit. n/t

[Blue Belle]

26. Don't condem yourself for shopping online....

a lot of people are doing it. Aside from groceries, I shope for most of my stuff online. I don't have a lot of money to spend on clothing and other items, so I try to stretch my dollars as best I can. A lot of people are in the same situation.

[DaveJ]

12. Yeah, but only partially

People have a wider variety of things to buy that they did 20 years ago. Now people are spending tons of money on computers, video games, cell phones, software, videos, etc. But not only the market, but the economy as a whole, needs to change to facilitate these kinds of purchases. I don;t think they are as environmentally dangerous since many of them are information based and do not fill up landfills quite so much like the stuff people used to buy. Frankly, people need more money so they can buy more of this new type of stuff for this new economic model to work,

[ColbertWatcher]

7. k+r. n/t

[NJCher]

9. new business models

Business models are changing. For an example, read this about the "free" business model and the size of the "free" economy. Scroll down to the July 30th entry:

http://www.thelongtail.com/

with the longtail, "long" means retail shelf space; "tail" means the unlimited shelf space offered by the Internet.

Craigslist has left ebay and newspaper classifieds in the dust. Will these new business models do the same to retail?



Cher

[Fumesucker]

52. I do a lot of business on craigslist

And it is a real pain in the ass..

Lots of scams, lots of people that do not respond to email or phone calls..

Not to mention that you still have to drive to get, or often to sell, your item.

If you have anything at all unusual to sell or buy ebay is far preferable, the size of the potential market is immensely larger than craigslist in even the most populous metropolitan area.

I see craigslist and ebay as complementing each other more than they compete. Craigslist is almost entirely face to face transactions while ebay is almost entirely remote buying and selling and the items are shipped.

[onethatcares]

10. I've noticed that in the VISA ads lately

that we're a nation of consumers. it seems the free marketeers and capitalists forgot that people need jobs in order to "consume" their junk.

[DaveJ]

11. The Earth can only produce so much junk

That's probably the main problem. And people only need so much of it.

Once someone has a few pairs of pants ans shirts, and a few other necessities, that should be it for that kind of shopping.

There is only so much need for consumerism. So there's only so much need for all these massive shopping malls with a huge number of stores selling junk that nobody really needs to be buying in the first place.

While I agree that people have too little money to spare, and the job situation sucks these days, I think even people who do have money to shop probably prefer to spend their money in a wider variety of things making duplication of these types of stores unnecessary.

[riverdeep]

19. Shhh. Don't say that too loud.

That's worse than being a communist. Being satisfied.

[earth mom]

13. Don't forget Sharper Image, Linens n Things, Starbucks, Bennigans, Mervyns....

Sharper Image: shutters 86 stores across the United States. http://news.cnet.com/8301-10784_3-9956802-7.html

Linens n Things: closed 120 stores and plans to close 57 more stores. http://www.pressofatlanticcity.com/106/story/216871.html

Starbucks: closes 600 stores. http://seattletimes.nwsource.com/html/businesstechnology/2008057769_webstarbucks18.html

Bennigans: files for bankruptcy and closes restaurants in 32 states. http://cbs11tv.com/local/bennigans.restaurants.closing.2.782514.html

Mervyns: Mervyns fights to keep doors open-177 stores. http://online.wsj.com/public/article/SB121659710322668977.html?mod=2_1356_leftbox

:scared:

[HCE SuiGeneris]

14. You beat me to it.

I agree... :scared:

[AwakeAtLast]

15. I don't shop at any of these stores

I'm either not close to them, they are too pricey (and I mean that they have been for many years), or I don't particularly like them. Could *that* be a reason they were shaky, and then the downturn was the last straw? :shrug:

I'm of the opinion that if you are offering quality merchandise with good service (crazy idea, I know ;) ), your chance of closing is highly diminished. Am I wrong in thinking this way?

[daggahead]

16. What upsets me the most is ...

that all of these stores are in malls or plazas that were built by bulldozing farms, woodlands and wetlands that cannot be replaced. Sure, nature can re-take these areas eventually, but the damage has already been done, especially in how the plazas and malls attracted more and more people that eventually bought their starter mansions on more of those old farms, wetlands and woodlands.

Hurry up and build ... and then the stores go empty ... what a friggin waste.

[dysfunctional press]

17. Home Depot is the only store on that list that i ever shop at.

and they are closing the store that i usually frequent- but only because they've opened a bigger store just a couple miles away to replace it.

[CanonRay]

18. You left of Mervyn's, which announced over 100 closings yesterday.

[Blue Belle]

27. Thanks...

Mervyns has been closing up shops for awhile. They closed a lot of their Oregon stores about a year ago.

[JCMach1]

20. Depression is overstated- a better model might be the real estate bubble that crashed in Japan

and left them with almost a decade of stagnation coupled with contraction at times.

[sentelle]

21. perhaps this is good

First: you forgot the sharper image. (Closed).

Yes, I know, that short-term this will be bad for working (and non-working) families. But it was bound to happen sometime.
We've been living in an unreal credit economy since the 70's. This made it easy to have a throw away economy that was made strong by having money circulate. This is the basic theory of supply side (reaganomics, voodoo economics, whatever). It drove up prices, and created a false economy of prosperity. We saw all this money, and decided to go after it, and when we got a little of it, didn't think how small it was, forgot (or belittled) the sacrifices we made to get there, and attempted to get more. The problem was that in Reagan-world, deficits don't matter, but in real life, they do. We didn't care, we decided to spend our way to prosperity, and to 'fake it til you make it' not realizing that all the neighbors, you'd been 'keeping up' to, were also leveraged. But as long as credit was there, we could still pretend, we could look rich, so that the rich might think we too, were rich, and get something lucrative from them. The big score. And there were a few sucess stories, enough to know it was possible, enough for us to lie to ourselves that this house of cards was not really cards, ready to collapse at a moment's notice, but of sterner stuff.

And we got used to credit. Credit on cars, on houses, on cards. It got to the point that no one actually saved anything. And retailers noticed. They discovered they could make more money on credit then on retail. So you got car dealers pitching leases (on a car at full MSRP, which no one really pays, unless you are on a lease) rent to own schemes, department stores with their credit cards. and so credit gets easier. Prices jump, savings fall. But that was the point right? To keep money in circulation. Money saved is not in circulation.

And now comes the day of reckoning. Where the credit comes due, and no one has any. The house of cards really is a house of cards, and no, Uncle Sam was not looking out for you. They decided not to make sure the voter was safe, but to make the credit companies.

So maybe this is the market correction for 20+ years of reckless spending. It will create a void, but eventually, be rest assured, the void will be filled

[Snarkturian Clone]

24. Some of this list is a little misleading.

Most of the clothing stores have either gone out of style or are losing to better competition. Department stores were doing shitty before all this economic mess.

Some of them have always done pretty badly (Disney Store, KB Toys)

Some of the figures are misleading... Home Depot closes 15 stores... so what? That is a small percentage of their total, and, as someone mentioned upthread, some are being closed because they are being replaced by new stores. Macy's, 9 stores? Again, they have waaaay too many stores as it is... the one near me is being expanded right now.

Old fashioned furniture stores (Levitz) have been going out of business for the last 20 years... just being replaced by places like Crate and Barrel and West Elm.

I agree that there definitely is an economic downturn but misleading lists like these are not the kind of proof we should be parading around.

[LWolf]

25. On a personal note,

when I moved to a smallish town, growing rapidly, 3 years ago, I made frequent trips to the town 14 miles south to visit Home Depot, on your list, and Lowes, which is not. I have the ultimate fixer-upper, which is decaying faster than I can repair it. After all the work I've done, it needs more fixing now than it did when I moved in.

Home Depot and Lowes have since built stores in town, which opened last fall. Now I don't have to drive so far to get stuff for repairs, etc..

Of course, I now have no budget to do any repairs at all, so I haven't visited either store ONCE. The place is falling apart around me. The people I could hire to help with the stuff I can't do myself are struggling to survive, because there is no work. I'm not the only one that can't afford to hire them.

On a tight budget anyway, when I needed help, I usually hired a local handyman that lives with, and is taking care of, his elderly parents. His work is decent and affordable. I feel bad; I have enough to have kept him busy with smaller and larger jobs all summer, but no money to start, so the jobs sit undone, and he's struggling.

[Blue Belle]

29. Lowe's is on the list...

but they haven't closed any stores. I can tell you, because I work there, that they are cutting way back on employee hours and have a hiring freeze in a lot of their stores. Our store is pretty good on sales because we are the only store in a 50 mile radius, but other stores may be vulnerable soon.

[cherokeeprogressive]

28. Piercing Pagoda? OMG!

Wickes and Levitz both SUCKED. Most of the other stores are what I would consider "boutique" stores (I said most). Yes, the economy is bad. This is not the best way to prove it.

[Blue Belle]

35. Who said this was the best economic down-turn indicator?

I'm just saying that these store are going under very near that point. Stores that have been in business for years. I'm just starting a conversation here.

[jazzjunkysue]

30. Without any manufacturing, we can only keep pushing around the same dollar for so long.

If Barack can pass laws about green industries, we could become a manufacturer again.

I'd like to see us making solar panels affordably, and solar collectors, and windmills.

I just installed a japanese room heater that runs on propane. As far as I know, we don't make any of those. We should.

We should be making electric cars and motors and batteries.

This economy is huge if we'd just apply some long-term solutions.

Germany has a government program where they'll buy all the electricity your solar collectors make at a guaranteed price. That encourages land owners to privately invest in the technology. We could do that, if we decided to.

We could also install solar collectors all over nevada, and that would make enough juice for the entire country, pollution-free.

Let's do it.

[TexasObserver]

32. thank you!!

agreed

We are not creating value any more. We're doing each others laundry and serving each other food. You can only keep doing that when there's some real value being created somewhere else.

[jazzjunkysue]

34. Right. It's no surprise that the supply chain is slowing: There's nothing starting it.

There's no raw material being processed, no patents pulling in the $$.
A factory can't put people to work without orders, and no one outside the US needs anything we do.

We've got to wake up and realize that long term solutions are in science and technology. Other countries are beating us there.

That's what the original purpose of the space program was: Innovation. That requires governmental support. We can't keep putting free market capitalism in charge (ours really isn't free, but, you know what I mean) and expect long-term research to take place.

[Recursion]

36. Steel is doing surprisingly well right now...

...because of Chinese, Indian, and Russian manufacturers who want it.

[eridani]

38. We are also putting each other in jail--

--and beating the shit out of helpless countries and taking their resources.

[Leopolds Ghost]

45. Beating the shit out of people is a great industry to be in.

You'll never want for work.

[earth mom]

42. Solar and wind power are the best alternatives out there. Propane is a scary idea.

Obama is supporting offshore oil drilling and so I doubt he'll follow through with anything "green" that Gore supports.

Obama will go with whatever the corporations who really run this country want to do. And I'd betcha that they don't want to change a damn thing. :grr:

But that said, I agree with your last sentance; I think it's up to us to do it; to be the change we want to see.

Here's where we start:
http://www.wecansolveit.org/

[Blue Belle]

43. I hope you are wrong about Obama...

I think Green is the only way to go to get America producing things besides consumers.

[Leopolds Ghost]

44. Or we could start manufacturing consumer products

using tariffs and subsidies for domestic hiring, if you prefer.

And stop de-zoning industry and stop banning mixed-use,
ridiculous parking and infrastructure requirements, and
lack of flex space zoning in places like Greensburg, KS

(as part of their "green development plan" backed by new urbanists
who don't seem to understand why it's good to have a welding shop
in a "residential neighborhood")

[closeupready]

33. Not Bombay! No!

I loved that store. :(

[high density]

39. Businesses aren't buying anything either

I work in an organization that sells business products and nobody wants to spend money. Our worst year in decades.

[Indenturedebtor]

40. Yep everyone is "cutting back" and thinking about selling

Our economy has been based on bullshit for decades. Wages haven't kept up, credit has "filled" the gap, and the whole system is just a big nasty pyramid scheme. Unfortunately for this "multi level marketing" scheme that has been our economy - we're running out of suckers.

[klyon]

41. Yup, tinkle down economics is working

just put it on the credit card...... I haven't seen them lowering their rate

[tavalon]

48. So, if there will be a grocery store and value village,

I'll be fine. I think my job is depression proof (nurse), especially since I have a lot of years under my belt and am currently unionized. I read an article about value village last week that said they were expanding because in this economy, new people are flocking to thrift stores. Welcome aboard folks. Now, mind you, I don't buy all that many clothes, except for my sprouting teenage son, because while I don't sew whole cloth, I can mend like a demon. I even have a fair skill at darning socks!

[Blue Belle]

49. There was an article in our local paper of the influx of people...

using consignment stores to sell their used clothing. They also see an increase in business during an economic crunch.