Retail's Doing Gucci

Insert overly-dramatic quote by WSJ about the death of retail and how no one wil ever step foot in a grocery or department store ever again.

Now that we have that out of the way, we can focus on something more tangible. We all know that retail is changing, actually quite quickly but with some very neat concepts that will probably change the way retail is laid out for the future. Let's go over this correction and , in my belief, why it's actually two-fold:

We Are Vastly Over-Built -Props to Felix Richter and Statista.com for that chart.

Let's do a quick comparison: (estimates)

• America's Pop: 325.1 million
• China: 1.388 billion
• India: 1.342 billion
• Brazil: 211.3 million

Now compare that to their respective retail space sourced from Statista and you'll see that America has over-performed in this area. It is safe to say, however, that compared to those countries, America overall has more developed land. This can be seen by population density in emerging cities and places of living. If we look at some of the biggest cities in, say, China, well we already know that you can get a 100 SF apartment for the same rent as 1200SF on the West Coast (obvious exaggeration) (sort of). But to add to that point, yes America is more developed in terms of land, which allows for more people to spread out over more sectors an in-turn, they need somewhere to shop and eat and all that fun stuff.

The probable issue with this, seems to be that we have taken this too far.

If we take a look at most of the stores going out of business, it's the stores that have been in business for some of the linger periods, (Macy's, GAP, A&F, Hollister, Sears, JC Penny's, KMart, and the list goes on & on). In there place, are retailers that are adapting to the modernized way in which we like to shop in the 21st century. Companies like Dick's Sporting Good's, Ross, Dollar Tree (who acquired Family $ Store), H&M, TJMax, and Academy, are a part of the hottest retailer brands still going strong, and doing better now than they have in the past.

What do they all have in common?
They appeal to the lower income - middle income average shopper. You can go into these stores and walk out with a cart-full, all without braking the bank. Too most people, this is highly valuable.

What's so different about shopping in the 21st century?

Sales people no longer know more than their everyday shopper. They can't sell you on the most expensive purse or the $100 jeans like they used to. People have, surprisingly, gotten smarter.

• Being online drives foot traffic. As ironic as this may seem, it's now know that the larger online presence you have, the more likely that your stores will be filled with customers who are simultaneously connected to their iPhone.
• "Social Shopping": What your friends say about that outfit now matters more than it ever has, so following the hot tips of customers has become the new trend of retailers and a lot of stores are reluctant to do this primarily because they are used to creating the trends, not following them.
• Compulsive Shopping is at an all time low, while Habitual Shopping is becoming the new norm. People are less likely to go out and spends hundreds of dollars to a new store than they are to spend the same amount this time, similar to they did last time, at the same store, as last time, on slightly different outfits.

"Well what about food, you're forgetting all about the eating aspect of retail."
For the most part, food really isn't changing all that much. Most luxury diners and fast food chains have not been affected all too much, which is mostly expected, because, people eat. Yes, it is changing, and a lot of this is coming from these StartUp delivery companies such as UberEats, Postmates, Grubhub, etc., and while this does keep the consumer from driving out and generating foot traffic on the properties, the retailers are still making sales. Their fellow tennants might be pissed, but most food chains don't really give a shit. Until these delivery companies become real issues, there is a chance that they make take some serious consumer foot traffic away from these restaurants. Until then, it's all dandy ;-)

I am not going to dive into detail about the entire E-commerce threat, we are all overtly aware about that. I will say something though. If you think retail is going to die, ask yourself why Amazon just bought Whole Foods, and ask yourself why the biggest e-commerce company is creating prototypes for their own store.

Lastly, REITs combined ended the 2016 year with growth of 9.28% growth, which while not being bad, is -2% from the usual growth.

What are your thoughts?
If I am wrong about any of this or any of these concepts, please correct me. I still have a lot to learn and want to be able to talk to the partners at my firm about retail as it's are specialization.