Cramer: time to bury the 'death of the mall' story

[coredumped]

Jim Cramer says the theory that brick-and-mortar retail are losers that cannot overthrow Amazon is completely wrong.

"The conventional wisdom about shopping has been totally wrong ... This past quarter put the lie to that supposition in so many ways," the "Mad Money" host said.

Amazon's $50 billion in domestic sales in the past year was an indicator to Cramer that there is market share for everyone, as the U.S. had $4.71 trillion in retail sales during the same time period.

Brick-and-mortars, which once seemed like zombies, once again have a pulse.

"That is why we need to bury the whole 'death of the mall' narrative right this minute, because so many mall-based stores put up good numbers with good commentary," Cramer said.

Full article:
http://www.cnbc.com/2016/08/22/cramer-weve-got-retail-all-wrong--time-to-bury-the-death-of-the-mall-story.html

[Kerry]

I think this is a case of Cramer using the phrase "The mall is dead" without understanding that the phrase has a total different meaning to a lot of people than how he is using it.  The mall is dead.  The mall-based stores he is talking about haven't opened any significant amount of mall-based locations in a long time because no one is building new malls.  They are now opening in out-door lifestyle center and stand-alone urban locations.

[finehoe]

I think this is a case of Cramer using the phrase "The mall is dead" without understanding that the phrase has a total different meaning to a lot of people than how he is using it.  The mall is dead.  The mall-based stores he is talking about haven't opened any significant amount of mall-based locations in a long time because no one is building new malls.  They are now opening in out-door lifestyle center and stand-alone urban locations.

Exactly.  "Retail" is not synonymous with "mall".

[Captain Zissou]

Yeah I think he's confusing two things here.  Malls are dying, but Amazon's success does not mark the end of traditional retail companies.  I'm sure that online sales as a percentage of over all revenue at traditional retailers is continuing to climb.  Retail store build-outs  are far more expensive than upgrading a company's online presence, so while I don't think stores will go completely by the wayside, I think we won't be seeing expensive and impressive flagship locations being put in malls going forward.

[Snufflee]

Yeah I think he's confusing two things here.  Malls are dying, but Amazon's success does not mark the end of traditional retail companies.  I'm sure that online sales as a percentage of over all revenue at traditional retailers is continuing to climb.  Retail store build-outs  are far more expensive than upgrading a company's online presence, so while I don't think stores will go completely by the wayside, I think we won't be seeing expensive and impressive flagship locations being put in malls going forward.

I would agree, outside of Nordstrom (I don't consider Penny's an anchor store) mall retail struggled.. the majority of the retail success was in Wal-Mart that doesn't rely on mall shopping as a support mechanism and smaller retailers whose foot print doesn't require multi hundred million dollar build-outs.

[spuwho]

Walmart just bought a ecommerce site last week, as they said they were targeting Amazon directly.

Walmart has some of the best logistics operations in the US, but Amazon is catching up really fast.

Problem is that Walmart's ecommerce site reeks and they struggle getting "to store" shipping with products from affiliates. (Newegg has similar issues with affiliates)

If Walmart wants to compete, they will have to expand their pricing and logistics to product that doesnt sell in their stores and warehouse appropriately.

Their online product mix is too heavily biased to what will make a retail store profitable, not necessarily drive people to order from them. Why buy online when I can stop at the 50 zillion stores on the way home from work?

If they offered online product that wasnt in stores and had express pickup in the stores regardless of its source and waive shipping charges (since it will be part of their logistics, not UPS), I would say they have something.

People still want to shop and you cant have a drone drop off frozen items or milk in the middle of Florida in summer. So when they pick up the online orders, they can pick up the rest.

[simms3]

Jim Cramer purports to have actual knowledge and/or insight into everything between the stratosphere and the earth's core, and then some.  He is a TV personality, but most of what he says should either be taken with a grain of salt or translated into a bigger picture idea, for which he may be on to something.

In this case, even if he were talking about bricks/mortar retail being alive and strong rather than pidgeon-holing his argument into physical malls, he misses the mark on the bigger picture.  What's going to happen to bricks/mortar retail when the next recession hits?  Or when gas prices go back up?  They will be among the first thing sacrificed in a two-pronged attack by the US consumer, who will both pull back on direct discretionary spending and who will go for savings when he/she can (which includes online shopping, as that saves vehicular trips and generally also offers savings even with shipping factored in).

I think a general consensus has long been formed that certain soft goods will always need a physical place to be sold, or at least show-cased.  Think clothing, especially clothing that is middle to upper market, or fashion forward.  This is outside of the fact that even with clothing retail/retailers, we are over-retailed, which has forced many closures even amongst these retailers.

Another consensus is that technology is and will continue to consume jobs across the map, from services provided in places like H&R Block to your local dry cleaner, who may soon face stiff competition with dry cleaner versions of Laundry Locker and other modern day conveniences.  We are shifting to a mass technology/IoT/DIY society and culture.  Many many things have yet to become obsolete and never to be replaced in a way that necessitates a storefront/office.

Finally, another consensus is that people still value experiential shopping, but that given the wave of urbanization and the previous period of non-differentiating, a shift in experiential desires means that shoppers prefer established downtown/big city experiences that offer all the things that typical malls or suburban shopping centers cannot.  This means that shopping will continue to be or even increase in orders of magnitude a reason people travel.  Urban centers with established shopping such as NYC, Chicago, SF, and other cities around the US and globe will continue to see tourism increase, and their shopping corridors thrive and grow, even as other parts of these cities see evidence of the general trends of downsizing and closures affecting most of America.  Lots of people will choose to do much of their experiential shopping in trips to such city centers, as many already do.

And for everyone else's sake, malls don't need to be indoor structures that look like the Avenues.  For those of us not in retail leasing, development, or acquisitions/management, the SJTC is every bit as much of a mall as the Avenues.  Penny's is an anchor.  Something like a larger Forever 21 could be a junior anchor or a regular anchor.  These things are not really up for us to decide.

And "lifestyle" centers have historically been a disaster compared to any other retail product type when viewing their total history, from first prototypes developed to the clones built over and over again by a number of regional retail developers who bet big and eventually sold to REITs and private equity groups.  Many of those centers, most having been built within the last 20 years, have had issues dealing with their anchors, since most of them couldn't attract the more stable department stores and since most of them contained a "power center" component and a movie theater.

Bricks and mortar retail will continue to struggle, and the numbers do and will continue to prove that theory out if adjusted for CPI or other measures which can impact consumer spending as a whole.

I also think there will be a huge impact as time wears on from Millennial spending habits.  More and more people are preferring to spend money on experiences rather than things, and fewer and fewer people are able to or are owning homes, which are generally larger and requiring more things, but also places owned by people who are relatively settled down and willing to make little investments in things here and there.  The renter generation will continue to prop up a booming food and beverage industry, but will help be the downfall of more retail to go.

As a result, we are seeing a growth in independent retailers, particularly on the fashion/clothing side.  Many are owned or co-owned by people who may have gotten there start as a vendor on an online distributor, such as Etsy.

And don't discount the risk that more communities might try to emulate a San Francisco, which places legal limits on "formula retail" (chains) throughout the city, limiting places that chains can locate.  The movement to go local or support smaller businesses is growing and is evolving from simply being a "farm to table" phenomenon.  A rapid growth of this movement would signify a rapid change in sentiment to the standard retail available now, and could really change the landscape quickly.

[Kerry]

Simms3 - on the big picture front I think you are partially correct about automation replacing almost every job on the planet, however, we are going to have currency collapse before then (and soon btw).  When the debt-based currency collapses all the jobs, companies, and industries sustained by debt will simply vanish.  I think we are going to see a total collapse of globalism, and probably even nationalism, with a resurgence in localism (and return of the City-State).  The only thing that will be shipped will be raw materials, which will then be turned into finished products locally.  Our challenge in Jax is going to be where do we build the new city wall.

[Adam White]

Simms3 - on the big picture front I think you are partially correct about automation replacing almost every job on the planet, however, we are going to have currency collapse before then (and soon btw).  When the debt-based currency collapses all the jobs, companies, and industries sustained by debt will simply vanish.  I think we are going to see a total collapse of globalism, and probably even nationalism, with a resurgence in localism (and return of the City-State).  The only thing that will be shipped will be raw materials, which will then be turned into finished products locally.  Our challenge in Jax is going to be where do we build the new city wall.

Do you get your tinfoil hats from Amazon or brick and mortar retail?

[Kerry]

Simms3 - on the big picture front I think you are partially correct about automation replacing almost every job on the planet, however, we are going to have currency collapse before then (and soon btw).  When the debt-based currency collapses all the jobs, companies, and industries sustained by debt will simply vanish.  I think we are going to see a total collapse of globalism, and probably even nationalism, with a resurgence in localism (and return of the City-State).  The only thing that will be shipped will be raw materials, which will then be turned into finished products locally.  Our challenge in Jax is going to be where do we build the new city wall.

Do you get your tinfoil hats from Amazon or brick and mortar retail?

I do buy from the internet - but what part did you think was tinfoil hat worthy?

[Adam White]

Simms3 - on the big picture front I think you are partially correct about automation replacing almost every job on the planet, however, we are going to have currency collapse before then (and soon btw).  When the debt-based currency collapses all the jobs, companies, and industries sustained by debt will simply vanish.  I think we are going to see a total collapse of globalism, and probably even nationalism, with a resurgence in localism (and return of the City-State).  The only thing that will be shipped will be raw materials, which will then be turned into finished products locally.  Our challenge in Jax is going to be where do we build the new city wall.

Do you get your tinfoil hats from Amazon or brick and mortar retail?

I do buy from the internet - but what part did you think was tinfoil hat worthy?

...however, we are going to have currency collapse before then (and soon btw).  When the debt-based currency collapses all the jobs, companies, and industries sustained by debt will simply vanish.  I think we are going to see a total collapse of globalism, and probably even nationalism, with a resurgence in localism (and return of the City-State).  The only thing that will be shipped will be raw materials, which will then be turned into finished products locally.  Our challenge in Jax is going to be where do we build the new city wall.

[Tacachale]

[Kerry]

This isn't the thread to discuss Localism at length but if someone wants to create a thread and post the link here I would be more than happy to discuss.

[mtraininjax]

From Barron's this week, Aug 29:

Consumers are moving more of their back to school shopping online, says Connexity's Bizrate Insights:

45%: share of technology devices bought online

31%: clothing bought online

24%: share of shoes bought online

13%: school supplies bought online

83%: share of school supplies that will be bought before school  starts

Cramer is a smart guy, but everything that can be found on Amazon will eventually be purchased with the smartphone and come to you from the new Amazon warehouse on Jacksonville's Northside.

[coredumped]

I've stopped using Amazon quite a bit for 2 reasons. First, they now charge tax in FL (not their fault). And second, they raised their rates for free shipping. I didn't find prime worth the price, since everyone price matches them. For example, best buy will price match and give free 2 day shipping.
Amazon has a great selection though.