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Retail Apocalypse Amplifies: Media Ignores The Debt Catalyst

Mac Slavo
April 11th, 2019
SHTFplan.com
Comments (18)

As the retail apocalypse continues to accelerate as we inch toward the middle of 2019, many in the mainstream media seem content to ignore the major problem: debt.  The companies closing stores did have the disadvantage of keeping up with Amazon, but the real problem is that the debt load got to be too much, and they filed bankruptcy.

E-Commerce (or online sales) represented only 14.3% of all consumer sales in 2018.  That’s up, but only minimally from 12.9% in 2017 and 11.6% in 2016. These statistics are hardly worth mentioning, however, all of these stores closing had one bigger elephant that no one seems able to talk or write about: massive debt.  They simply bit off more than they could chew.  The Washington Post, for example, was content to blame the entire “accelerating” retail apocalypse on online sales. Articles that do mention the overloading of debt are barely scratching the surface.

The E-commerce sales are not enough to put stores out of business, but couple that slight loss in sales (even though it wasn’t much as retail consumer spending jumped as well) with the massive debt load these corporations have taken on and we have a retail apocalypse.  This very issue shows just how dangerous debt can be.

Shopko’s undoing was their debt load.  According to Money.com, Shopko announced in mid-January it was filing for Chapter 11 bankruptcy and restructuring debt. While trying to stay afloat, the struggling retailer said over the past few months that it would be closing about 250 stores. Plans changed mid-March when Shopko said it would liquidate all of its assets and close all of its stores by June 2019.

Brian Kelly, president of retail consultancy firm Brian Brands, explained to RetailDive.com at the end of 2018, when Shopko had just announced it was closing a few dozen stores. “[Shopko is] another retailer broken by debt and … caught in the death spiral.”  

Average Americans continue to overspend and are also still taking on debt as many are becoming tapped out 

Mega Retailers Close Stores: Hard to Shop “When People Are Just Trying to Pay Their Mortage”

The entire retail apocalypse was set off by the growing problem of corporate debt and the debt-based system we live in. Analysts are predicting 75,000 more stores will be closing by 2026. According to Forbes, in an analysis from UBS, it finds that with each 1% increase in online penetration, some 8,000 to 8,500 stores will need to close. At online sales current rate that means some 75,000 stores will be forced out of business by 2026, or about 7% of the 1,044,754 retail establishments in the United States today, according to data from the Bureau of Labor Statistics.

During one particularly dramatic 24-hour period in early March, J.C. Penney, Gap, and Victoria’s Secret announced they would be closing more than 300 stores combined. Sears Holdings, which operates Kmart and its iconic Sears flagship department stores, has also been struggling to survive, and many believe it won’t last through 2019. –Money.com

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Author: Mac Slavo
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Date: April 11th, 2019
Website: www.SHTFplan.com

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18 Comments...

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  1. Justice says:

    RE-POST – Off TOPIC: IMPORTANT DEAL!

    Looking for communications equipment, then check out this deal at Walmart: CB Radio and Antenna for $29.00

    Uniden PRO505XL 40-Channel Bearcat Compact CB Radio and Tram 703-HC Center Load CB Antenna Kit

    h ttps://www.walmart.com/ip/Uniden-PRO505XL-40-Channel-Bearcat-Compact-CB-Radio-and-Tram-703-HC-Center-Load-CB-Antenna-Kit/50705164

    • Genius says:

      Justice, That is a good deal BUT (as I concluded in the last thread we talked together) cb is a very crappy prep radio. AM/CB has a lot of static and no privacy and very short range. A 4 watt baofeng on uhf fm will go much further and penetrate trees/buildings etc. and is handheld and programmable and dual band. It is the same price as the cb but 100 times more useful and portable. The only reason I have a cb is to listen for truckers talking, other than that it sits on the shelf. Did you read the last bit I left for you on the solar discussion the other day about the battery desulphator?

  2. Seminole Wind says:

    The answer is two words, Walmart & Amazon. Nuff said?

  3. Bert says:

    you live in a closed system, a dollar not spent at store A will get spent in store B

    It is a wash

    • “It is a wash”
      Until people have no dollars.
      Fed inflation
      Quantitative easing
      No real gain in income since the 1980’s
      Illegal immigration

      • Anonymous says:

        Consumer spending is actually up, but wages have only gone up by 6% (on average) after 40 years of wage declines, with no idea about which people got the wage hikes.

        Who’s doing the increased consumer spending?>

        Is it underemployed people working only part time, which is half of all employed persons in the USA?

        Is it legal / illegal immigrants who often enjoy welfare-augmented wages and up to $6,431 in yearly refundable child tax credit cash, with pay and welfare / child tax credit money frequently sent out of the US economy in the form of 120 billion in total yearly remittances, with $28 billion of it per year going just to Mexico from just the illegal aliens?

        Is it dual-earner parents who monopolize the household-supporting jobs with benefits, with two rent-covering incomes per household and non-refundable child tax credit cash to boot?

        Except in cases of inherited wealth or high income from a single earner supporting a household, we know it’s not increased spending by the 95 million prime-aged US citizens out of the labor force.

        Most Americans are not in dual-high-earner households or households where one parent has a high-paying corporate job, with the other in an above-firing, family-friendly, absenteeism-friemdly government job with 80% mom employees, encouraging loser spending due to the crony security of at least one spouse’s job.

        Most are not being paid by government six ways to Sunday to work part time in a single-breadwinner household with kids, staying under the earned-income limits for multiple monthly welfare programs, with refundable child tax credits providing more non-credit-based spending money.

        There is a lot of bad subprime auto loan debt, suggesting that most of the consumer spending beyond necessities is being done via various forms of credit. It might be young people, running up a lot of debt on nonessentials, not realizing what that will mean in the future.

        Gov will bail will probably bail out the Millennials on their student debt, using the “working families” rhetoric to justify treating the Millennials much better than other citizens. Politicians will go along with it because they play a numbers game despite all of their emotional, family-themed podium-thumping. Millennials are a 76-million generation of potential voters to keep politicians in their government jobs at $174k, whereas the Xers who had to pay back student loans, business loans and other loans in a labor market that was just as bad except for the top 20% are only a 48-million block of voters.

        Retailers mostly sell things, not experiences.

        .Gov is not going to bail out Millennials on high-interest credit used to finance gourmet-organic dining, status-elevating trips to Europe to take selfies in front of poorly-protected architectural masterworks or $300 hemp-canvas shoes made by global cooperatives, whether bought online or in brick-and-mortar stores.

        Millennials actually seem thriftier than Xers on clothing and home decor, even though the Xers were not big spenders on luxury items other than status-vaulting houses as anyone who has owned a business or sold to this market knows. The dual-earner Xers in the top 20%, too, mostly spent on fine dining out, travel and other experience-based things.

        The viability of brick-and-mortar businesses has a lot to do with too much competition, including from winner-take-all big boxes that play by different rules. Those retailers dominate on two fronts: online and on the ground. It seems like most of the ones closing stores are smaller chains, trying to compete with the behemoth big boxes.

        When you own a small “independent” shop, you often can’t even change locations for fear of losing even 10% of your clientele, so when your rent (or debt-load) increases, you just take a loss. But when you are smaller chain retailer, you can just shed brick-and-mortar locations to increase your cash flow in other areas.

        The 14% reduction in customer flow due to online sales probably affects smaller chain retailers who operate on such small profit margins due to so many competitors, but so does everything else, like any increases in costs. Non-commercial rent has gone up hugely for individuals. It has to be going up for retailers as well.

        Just because 14% of people are buying online, it does not mean that they were ever potential customers for the non-big-box brick-and-mortar retailers. A customer buying strictly from brick-and-mortar big boxes, or wherever s/he can get the lowest price so that no one makes a profit other than the biggest high-volume retailers, could buy the stuff online or in the store. It won’t affect you unless you are Wal*Mart, Target or some other huge discount retailer. Small, independent retailers and the smaller chain retailers offer some items just as cheap, but many consumers have dug-in shopping habits.

        Online is just 14% of sales, and it’s mostly a matter of dividing up the already existing sales unless the “increase” in consumer spending is big, with the online retailers that are not big-box brick-and-mortar players grabbing a lot of that increase.

        Most consumers are probably buying things on credit, with the brick-and-mortar retailers using more credit, too, since their overhead is so much more burdensome than what online retailers deal with. Chain retailers may be closing locations to shed some of their overhead costs in case the “great economy” is fueled by credit-based spending and womb-productivity -based tax credits, not by real job growth.

        The mom & pops will just go under in any apocalypse. Most already have, but no one cared. They are collateral damage in all apocalypses in the rigged economy. And they know it. That’s why so few individuals are opening new stores. It echoes the lack of overall laborforce participation. Whether you are employed or self-employed, work pays off for a select number of affluent, mostly womb-productive, dual-earner households and the government-financed, womb-productive households of single-breadwinner citizens and noncitizens. Happy shopping, moms!

  4. Justice says:

    Seminole Wind, I have a really strong “band hand” but I will buy from the devil himself to get my prepping supplies.

    I totally understand how people feel about Amazon and Walmart. I myself cancelled Amazon Prime more than a year ago. Plus, I only buy stuff I need for prepping. However, I am prepping on a fixed budget and I gotta do what I gotta do.

    • Genius says:

      Justice, I hear ya. And what ya gotta do is shitcan the CB thing and get another baofeng! 😀

      • Genius says:

        The original “UV-5R” do NOT get the new 8 watt piece of shit, TRUST ME ON THAT!

        • Genius says:

          Justice, I am only trying to help you avoid the mistakes I have made over the last 23 years. And I have made a few! Off grid and prepping offgrid is a trial and error thing and you can waste a LOT of money on things that don’t work so well. I would love to help you with what experience I have and can save you some dinero. One thing I have done is learn from OTHER PEOPLES MISTAKES lol let alone my own! I have my stuff pretty well dialed in now and it works great. I am happy to offer advice on a range of offgrid and prepping things. I can help you a lot if you just ask (don’t be afraid to).

          • Justice says:

            Genius, thanks for your comments/help. Often I post something because it’s what I’m doing and people can point out the good and bad of my choice. Or better alternatives.

            CB is NOT a great choice (i.e. there are better ones available). However, as you point out it is still useful:

            1. In talking to truckers (My bug-in and BOL are all close to major highways)

            2. They are cost effective.

            3. Effective close range, neighborhood comm’s. Make sure you have a code system.

            4. Very Simple to use.

      • Justice says:

        Genius, I hear you on the Ham Radio and using baofeng. I guess my brother and I divided the communication preps. He takes Ham and I have taken GMRS, CB Radio and non-electronic comm’s (e.g. Whistles).

        We are relying on each other to cross train the other. I keep meaning to learn more about Ham Radio but other things come up.

  5. The Deplorable Renegade says:

    All the Sears stores in my area including the hometown stores have already closed and I know others are coming. I’m starting to run out of local sources for my supplies. Now I’ll have to do more online shopping than I really wanted to. I dread that.

  6. Where are all these people going to work? Me thinks they will all vote for a socialist like Sanders….with the promises of universal basic income, food stamps, Medicaid, subsidized housing, education, healthcare, etc they will show up to the polls in droves. If the dems get win Senate also in 2020, Goodbye America.!!!!

    • Anonymous says:

      Democrats will never get the universal basic income passed. It is like the “universal” healthcare thing: a false promise to draw in voters who are not included in their pay-per-birth welfare, child tax credit freebies, student loan foregiveness schemes and free college giveaways.

      They wouldn’t care otherwise, but elections are now won on 1% margins.

      They may need the people who are shafted by their “working families” social-engineering programs, which flood the labor market with workers who do not need higher pay or full-time jobs since that puts them over the earned-income limits for welfare programs that increases with each birth in a single-brewswinner household: free EBT food, subsidized rent, subsidized electricity, monthly cash assistance and up to $6,431 in refundable child tax credit cash.

      You have to stay below the earned-income limits to get these things, and you also must have dependents in a single-breadwinner household to count as an expense against your earned income.

      Far more American job seekers (and voters) fall outside of this group. But do you really think they are going to extend this setup to the majority of employed citizens? How are they going to finance it? They say it can be done by eliminating the administrative costs of welfare programs, but they also claim that womb-productivity-based welfare is a small portion of the budget.

      Even if Democrats would finance the UBI by taxing the rich, Republicans would never go along with it. Republicans, like Dems, do embrace the pay-per-birth monthly welfare and refundable child tax credit rigging of the labor market. That’s because employers reduce their labor costs via this welfare rigging of the labor market.

  7. Asshat says:

    Don’t buy anything and live like your Amish. You will be ready for anything.

  8. First walked into a Shopko with the wife 8 years ago and couldn’t figure out how they were in business then! Store reminded me of a cheaper Kmart at best.