Results 1 to 16 of 16

Thread: 'The First Domino To Fall : Retail"

  1. #1
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default 'The First Domino To Fall : Retail"

    I'll once again attempt to post an economic analysis piece from our 'old friend' Charles Hughes Smith. The points he raises are arguably relevant to dancers and camgirls on several different levels. For what it's worth ... from


    (snip)"That the retail trade is stagnating has been well-established: for example, The Retail Death Rattle (The Burning Platform).

    Equally well-established is the vulnerability of the bricks-n-mortar commercial real estate sector to this downturn: yesterday's analysis by Mark G. makes the case: After Seven Lean Years, Part 2: US Commercial Real Estate: The Present Position and Future Prospects.

    I'd like to extend Mark's excellent analysis a bit because it suggests that the retail CRE (commercial real estate) sector will likely be the first domino to fall in the next financial crisis--the one we all know is brewing.

    Let's start with two charts of retail that I have marked up: the first is a chart of retail traffic from The Burning Platform story above. Note the phenomenal building boom in retail space from 2000 to 2008: nine straight years of adding about 300 million square feet of retail space each year.



    The second chart shows department store sales, which fell by 15% during the retail building boom.



    It might be possible to argue that this additional 2.7 billion square feet of retail space was needed as competitors ate the department store chains' lunches, but let's start by considering the foundation of retail sales: consumer income and credit.

    One way to measure income to adjust it for inflation (i.e. real income) and measure it per person (per capita) on a year-over-year (YoY) basis. Notice how real income per capita has absolutely cratered in the "too big to fail" quantitative easing (QE) era masterminded by the Federal Reserve: if this is success, I'd hate to see failure.



    Another way to measure median household income:



    There's a big problem with both per capita and median income measures: a significant gain in the the top 10%'s income will mask the decline in the bottom 90%'s income. If households earning $150,000 annually get a boost to $200,000, that $50,000 increase not only offsets the decline of nine households who saw their income decline from $35,000 to $31,500 annually, but pushes both the median and per capita income metrics higher even as 9 of 10 households experienced a 10% decline in income.

    The point here is that the declines are far deeper for the bottom 90% than shown on these charts, as the top 10%'s increase in income has skewed median and per capita income higher. We can see this clearly in this chart:



    Notice how the income of the top 10% diverged from the bottom 90% once the era of financialization and asset bubbles started in the early 1980s. Each asset bubble--housing in the late 1980s, tech in the 1990s and housing again in the 2000s--nudged the incomes of the bottom 90% briefly into marginally positive territory while it spiked the incomes of the top 10% into the stratosphere.

    There are only two ways households can buy stuff: with income or credit/debt, as in charging purchases on credit cards. We've seen that income has tanked for the bottom 90%; how about credit/debt?

    Courtesy of Chartist Friend from Pittsburgh, we can see that revolving consumer credit has flatlined:



    There's another component to the erosion of bricks-n-mortar and the ascent of eCommerce, as Chartist Friend from Pittsburgh explains:

    This M2 (money) velocity chart is better because it reminds us of the days when you would drive to the mall to make a purchase, and while you were there you'd stop at the food court to have lunch, and then maybe you'd walk around afterwards and see some other item you wanted to buy, or run into friends and decide to catch a movie or have a drink, etc. At the mall there are lots of ways for money to change hands - online not so much.



    Fewer trips to the mall (correlated to maxed out credit cards, declining real disposable income and the ease of online shopping) also translates into fewer miles driven and fewer gallons of gasoline purchased:



    All this boils down to one simple question: can the top 10% (roughly 11 million households) support the billions of square feet of retail space that were added in the 2000s? If the answer is no, as it clearly is, then the retail CRE sector is doomed to implode.

    Let's try a second simple question: what's holding the retail CRE sector up? Answer: leases that will soon expire or be voided by insolvency, bankruptcy, etc. as retailers close stores and shutter their businesses.

    One last question: who's holding all the immense debt that's piled on top of this soon-to-collapse sector? The domino of retail CRE will not fall in isolation; it will topple the domino of debt next to it, and that will topple the lenders who are bankrupted by the implosion of retail-CRE debt. And once that domino falls, it will take what's left of the nation's illusory financial stability down with it. (snip)


    Thus dancers and camgirls might want to ask themselves the following questions ...

    - are you holding any 'brick and mortar' retailer stocks which are facing increasing loss risk ?

    - are you holding any bank stocks that have a large stake in commercial real estate loans, which are also facing increasing loss risk ?

    - does the bank you use have a significant 'stake' in commercial real estate loans, which could potentially expose your bank to 'problems' ?

    - do the majority of customers that provide your actual dancing / camming income come from the $150k+ top 10% earners who are doing better than ever, versus coming from the bottom 90% of earners who are doing worse ?

    -

  2. #2
    God/dess whirlerz's Avatar
    Joined
    May 2004
    Location
    Midwest
    Posts
    27,134
    Thanks
    55,898
    Thanked 26,028 Times in 13,271 Posts
    Blog Entries
    1
    My Mood
    Aggressive

    Default Re: 'The First Domino To Fall : Retail"

    ah, interesting! How does/would one find out about their bank for that info?


    MANY MEN WANTED TO LAY ME DOWN, BUT FEW WANTED TO LIFT ME UP

    -Eartha Kitt

  3. #3
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: 'The First Domino To Fall : Retail"

    ^^^ well, mostly it goes by the type / size of the bank. Obviously the huge international banks have 'exposure' to everything from currencies to commodities to repackaged bonds to ( leveraged ) corporate buyouts, so some commercial real estate exposure isn't all that large of a share.

    Credit unions, by their charters, are generally prevented from getting involved in commercial banking / loans of any sort ... thus they have little or no exposure to CRE. In general, most credit union exposure problems stem from auto loans, credit cards etc. versus a member base that is primarily made up of 'bottom 90%' earners.

    Regional 'commercial' banks probably have the higest amount of CRE exposure ... although their exposure to auto loans, credit cards, other commercial loans, etc. may be significant too.

    And all of the above have 'shifted' exposure to RESIDENTIAL real estate loans to the US taxpayer, via Fannie / Freddie / FHA

    In regard to checking out a particular bank, the easiest place to start is the bank's website. If they make a 'big deal' out of offering Commercial Real Estate loans, odds are that they're heavily exposed. You can also check the valuation history of the stock shares of your regional bank ... starting at

    Also, please understand that FDIC / NCUA deposit insurance guarantees that personal bank accounts of $50k or less will ( eventually ) be made whole by one means or another. However, that doesn't preclude the possibility that the depositors at a failed banking institution will have their expected 'unfettered access' to the money in their accounts disrupted for some period of time in a bank failure scenario.

    In terms of a 'contrary' investment, there are a ton of REIT's out there which specialize in commercial retail real estate ... see the same link. These have the maximum exposure, thus are likely to see the steepest value declines if and when the author's analysis becomes reality.
    Last edited by Melonie; 01-21-2014 at 01:18 PM.

  4. #4
    Featured Member Odette's Avatar
    Joined
    May 2010
    Posts
    1,096
    Thanks
    517
    Thanked 1,272 Times in 520 Posts

    Default Re: 'The First Domino To Fall : Retail"

    So...hypothetically if the retail market is about to bust and a dancer had been thinking about getting into retailing as a retirement business... the next few years might be an advantageous time to pick up a shop for super cheap? The rent prices for retail spaces right now are crazy...would that also go down potentially? If everyone wants to sell their stores and close them doesn't that drive the market prices down? Or is this a sign to avoid the market entirely and come up with a plan b? I always thought that retail longevity wise was pretty safe as long as you are not exclusively a specialty retailer, and espescially if you have an online pressence. People will always need to buy necessities, and the demand for the "best" versions of "neccessary" products is pretty consistently high.
    "We can't expect you to just know all the secrets of our top-secret-titty-club!" --Jenna Marbles

  5. #5
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: 'The First Domino To Fall : Retail"

    ^^^ indeed your interpretation is correct, as far as it goes. Logically speaking ...

    - a 'bust' for brick and mortar retailers should result in a collapse in purchase prices for 'distressed' retail properties ( similar to residential in 2008 )
    - a 'bust' in brick and mortar retail property occupancy rates should result in a collapse of future lease / rental price levels

    As to your 'safe bet' analysis, if your product or service is targeted toward 'top 10%' earning customers, and physically located in close proximity to 'top 10%' earning customers, then I agree. However, brick and mortar retailers located in such areas aren't the ones at risk of going 'bust'. Thus finding a retail property located near 'top 10%' earning customers that has gone 'bust' thus for sale cheap is likely to be a major challenge. Same principle applies re finding bargain priced residential property in, say, Detroit ( where near zero locals are 'top 10%' earners ) versus finding bargain priced residential property in, say, San Francisco ( where a large percentage of locals are 'top 10%' earners ).

    On the flip side, if you pick up a retail property at a bargain price, but the local customer base is heavily comprised of unemployed, or near minimum wage / blue collar workers, I would have some difficulty classifying such an investment as a 'safe bet'. If nearly every available dollar must first go towards rent, utilities, groceries, etc. that doesn't leave much money available for spending on 'non-necessity' items. And what little money those customers have available that can be spent on 'non-necessary' items is likely to favor quantity versus quality. Real world example would be JC Penney's and Sears announcing retail store closures, while WalMart and Dollar General are ( sort of ) hanging in there.

    Put another way, being able to access 'top 10%' earning customers appears to be the secret of success in today's economy, regardless of the type of business. However, in most cases, prevailing price levels for businesses in locations that CAN access those 'top 10%' earning customers are - and will remain - expensive. To be blunt, anybody trying to sell ( high quality but expensive ) craft beers, organic vegetables, designer clothes, or any similar item will probably have disastrous results in Detroit, but will probably be highly successful in San Francisco !

    Agreed that a retailer with an online presence has a method of making an 'end run' around local customers. But an online retailer doesn't really need a brick and mortar storefront ( or the associated costs ), either.
    Last edited by Melonie; 01-22-2014 at 11:47 AM.

  6. #6
    Featured Member Odette's Avatar
    Joined
    May 2010
    Posts
    1,096
    Thanks
    517
    Thanked 1,272 Times in 520 Posts

    Default Re: 'The First Domino To Fall : Retail"

    I definitely agree that catering to the top 10% is becoming more and more important, and I see what you mean that a store could just end up being a money pit if it's not in the right location. The other thing I've been thinking about is competition. The cities where there is very high concentrations of top 10% earning workers tend to be the most expensive cities to live, have the highest costs for starting businesses, etc. In addition they are also frequently already picked over by competition. Since the basic principle of business is to "find a hole and fill it" or theoretically "start digging" in terms of an innovative start up, is it not better to start your business in a field with significantly fewer holes lying around initially? The fresher the field the better type of thing? As long as it's close to the water--the top 10%ers. A few years back I thought starting a business in a big city was the safest bet, now I'm thinking of a nearby smaller city, a city which is evidently more economically stable than my current location as I have been travelling there to work for almost a year, which still has a large percentage of top 10% earners, it being a stable government and technology city but signigicantly lower living and start up costs as well as next to nonexistent competition comparitively speaking to the city I live in now. I am thinking the medium sized cities are poised to grow more effectively (with regards to both finances and physical space) than their larger counterparts may be a good bet for small businesses who don't have an option either way to "go big or go home" with regards to going after those top 10% customers--advertising, fifth avenue esque retail space, etc. What do you think?
    "We can't expect you to just know all the secrets of our top-secret-titty-club!" --Jenna Marbles

  7. #7
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: 'The First Domino To Fall : Retail"

    ^^^ sounds like a good possibility !!! Top 10% ers will also prefer to shop local as long as the quality of goods and services measures up.

  8. #8
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: 'The First Domino To Fall : Retail"

    here's a not too surprising update ... for what it's worth ... from


    (snip)"If there was any confusion where the funding for what little shopping spree Americans engaged in during December, it should all go away now. While the street was expecting a 0.2% increase in both personal income and personal spending in the month of December, what it got instead was a flat print in income (i.e. unchanged from November) while spending (mostly for non-durable goods) spiked by 0.4% meaning there was a 0.4% funding hole that had to be filled somehow. That somehow we now know is personal savings, which tumbled from a revised 4.3% to 3.9% - the lowest since January 2013, only back then incomes would rise for the rest of the year driven by the 30% increase in the S&P "wealth effect." This time, with the Fed now tapering QE, the only way is down for both the "wealth effect" and Personal Incomes... and thus Personal spending, that majority component of US GDP.

    Finally, this data means that according to the BEA in December US consumers funded some $46 billion in spending through burning down their savings. As of December 31, 2013 total personal savings left are down to $495 billion."(snip)





    The seemingly important take-away from combining the most recent Christmas season retail spending data with this month's personal savings data is this. Even though retail spending levels ( both at brick and mortar retail stores, as well as at major Internet retailers ) were disappointing, in order to achieve even that disappointing level of spending lots of Americans were forced to ( further ) drain their savings. This is not 'repeatable'.

    While the data provided doesn't actually say so, it's a fairly safe bet that the 'top 10%' earners were NOT the ones who were forced to tap their savings accounts to be able to afford even a reduced level of Christmas shopping last month. This bodes very badly for any business attempting to sell 'non-essential' goods and services to the 'bottom 90%' of American earners.

  9. #9
    Featured Member rusdancer's Avatar
    Joined
    Dec 2004
    Location
    Europe/NYC
    Posts
    1,511
    Thanks
    2
    Thanked 198 Times in 96 Posts
    My Mood
    Flirty

    Default Re: 'The First Domino To Fall : Retail"

    Interesting article and charts! I can say that from personal observations and even from MBA studies, retail establishments are suffering now, and will most likely continue to. A growing percentage of shopping is moving online (e-commerce). As an example, loehmanns just declared bankruptcy, and will be closing stores by March. Sad news, was one of my favorite stores ! Same is observed in restaurants, however, many fine dining establishments are still doing ok with high cover numbers. Service and retail do have differences though.

  10. #10
    Banned
    Joined
    Aug 2011
    Location
    Aboard The Spaceship
    Posts
    4,787
    Thanks
    3,183
    Thanked 10,142 Times in 3,290 Posts
    My Mood
    Breezy

    Default Re: 'The First Domino To Fall : Retail"

    IMO, what has happened is a few things.
    1.) Vintage is trendy. This means shopping second-hand, from flea markets, and online.
    2.) Being a designer or e-boutique owner is also trendy.
    3.) People are tired of wearing the same clothing as everyone else. Especially poor quality stuff that falls apart.
    4.) Clothing trends have changed. Jeans and t-shirt no longer cut it (unless its vintage). The younger generations are heavily into high end designers and also streetwear. Also vintage. These items aren't sold at mid-range stores unless its a boutique (or perhaps a thrift store).
    5.) High fashion has become attainable for the everyday woman. Everyday middle class and even students shop at places like Barneys and Saks. In the 90s, those same people would have shopped at JCPenny and Sears. The rise of social media and the younger generation growing up with the internet has made the fashion (high end designers) industry boom. I really don't think this is bad though. Quality > quantity IMO.

    So I would think that retail is not down at all. Though I'm sure it is down for lower & mid-range stores because no one shops there anymore. Trends have heavily skewed the average person to shop really high end ($$$$) + vintage ($)... instead of previously, lower mid-range and mid-range ($$-$$$), and that cost has evened out. People would rather have a few quality items mixed with thrifted pieces, than a bunch of shitty mid-range stuff. Lower mid-range stores will be going out of business shortly. I already heard that Sears and JCPenny are slowly going out of business. Stores like Mervyns went out of business like 5 years ago. Others will almost certainly follow.

    The younger generations have different values. My generation and the teen one below mine. Its very interesting because they are generations growing up in a self-branding era. They self-brand themselves with social media, so of course they are very conscientious about the clothing they wear because it is an extension of their self-branding and identity. They are opting for small e-boutique brands or boutique brands they can relate to, lifestyle-wise. Or vintage, where they can channel a specific retro look. You can thank the internet for that mindset.

  11. #11
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: 'The First Domino To Fall : Retail"

    ^^^ At least part of the reason that 'designer' goods, 'upscale' restaurants etc. are still doing well is the 'top 10%' of American earners are actually doing better than ever ! This is arguably attribute to the facts that

    A. a fair share of 'top 10%' income stems from investments versus paychecks ... with US FED money-printing policy, and IRS tax rate policy, primarily benefitting investments.

    B. Other than a ( tax deductible ) home mortgage, most 'top 10%' earners do NOT have an expensive 'loan service' burden ... i.e. having to pay high 'subprime' interest rates on credit cards, auto loans etc. that diverts a fair amount of their actual after-tax incomes toward interest payments.

    I heard a statistic that the 'top 10%' of earners actually earn 47% of total earnings, versus the remaining 90% of earners comprising the other 53%. And, of course, everybody is 'forced' to spend a certain amount of their after-tax earnings on 'necessary' items like food, energy, insurance etc. Thus when it comes to money left over for spending on 'unnecessary' items, the 'top 10%' of earners are arguably responsible for the vast majority of total dollars spent. This explains why Mercedes and Maserati are having record years, while GM and Chrysler are in a relative slump. This also arguably explains why Gucci and Gap are having record years, while Penneys and Sears are in a relative slump. This also explains why 'trendy' upscale restaurants, consumer goods supplier ( like Apple ) etc. are doing well, while franchise restaurants and 'commodity' goods suppliers are 'hurting'.





    This also arguably explains why girls working in 'upscale' big city clubs that provide access to 'top 10%' earning customers are doing quite well, while girls working in 'suburban' clubs that cannot access such 'top 10%' earning customers are 'hurting'.

  12. #12
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: 'The First Domino To Fall : Retail"

    I just found a much 'better' analysis and chart to illustrate this point ... from

    I assume that the author's term 'counterfactual' is a projection of where income levels theoretically 'would have been' had the market conditions in existance 10+ years ago been projected forward without increased automation, outsourcing etc. not come into widespread application. 'Actual' is obviously where things 'really are' after the effects of automation, outsourcing etc. implemented over the past 10+ years are accounted for.


    (snip)the rapid improvements in computer technology over the last few decades have provided employers with ever cheaper machines that can replace humans in many middle-skilled activities such as bookkeeping, clerical work and repetitive production tasks. These improvements in technology also enable employers to offshore some of the routine tasks that cannot be directly replaced by machines (Autor 2010).

    Moreover, cheaper routine tasks provided by machines complement the non-routine abstract tasks that are intensively carried out in high-skill occupations. For example, data processing computer programs strongly increased the productivity of highly-skilled professionals. Machines also do not seem to substitute for the non-routine manual tasks that are intensively carried out in low-skill occupations. For example, computers and robots are still much less capable of driving taxis and cleaning offices than humans. Thus, the relative economy-wide demand for middle-skill routine occupations has declined substantially.

    This routinisation hypothesis, due to Autor, Levy, and Murnance, has been tested in many different settings and it is widely accepted as the main driving force of job polarisation.(snip)

    (snip)"I estimate the changes in relative market wage rates that are offered for a constant unit of skill in each of the three occupational groups. Again, the position of the middle-skill occupations deteriorates substantially: the wage rates paid in the high-skill occupations increased by 20% compared to the middle while the wage rate in the low-skill occupations rose by 30%. This decline in the relative attractiveness of working in middle-skill occupations is consistent with the massive outflow of workers from these jobs.

    Finally, I check what effect the changing prices of labour may have had on the overall wage distribution and whether they can explain the wage polarisation that we observe in the US. Figure 3 shows that the change in the wage distribution due to these price effects reproduces the overall distribution reasonably well in the upper half while it fails to match the increase of wages for the lowest earners compared to middle earners.





    At first glance, this is surprising given the strong increase in relative wage rates for low-skill work and the increase in the wages of workers in low-skill occupations. The reason is that these workers now move up in the wage distribution, which lifts not only the (low) quantiles where they started out but also the (middle) quantiles where they end up. The inverse happens for workers in middle-skill occupations but with the same effect on the wage distribution.

    Conclusions

    Despite the above findings, my paper does not provide the last word about the effect of job polarisation on the bottom of the wage distribution. This is because, for example, my estimates do not take into account potential additional wage effects from workers moving out of the middle-skill occupations into low-skill occupations. Therefore, we cannot yet finally assess the role that job polarisation versus policy factors (such as the raise of the minimum wage) played on the lower part of the wage distribution in the US.(snip)


    If you apply actual dollar earnings figures to the percentage quintiles shown in the graph, it becomes all too clear that the group of American earners whose relative incomes have 'suffered' the most roughly fall into the $50k to $120k per year earnings bracket. Unfortunately, this group of American earners typically comprises the majority of the customer base for most strip clubs and paid webcams, as well as the majority of the customer base for GM, Penneys, franchise restaurants etc.

    Similarly applying actual dollar earnings figures to the lowest two quintiles shows that, for various reasons, relative income levels have increased. Thus increased earnings for a 30 year old living at home and working at a 'low skill level' job ( regardless of the person's actual skill level ) may have translated into $15k per year becoming $20k. While those increased earnings may allow for the one time purchase of an I-pad, designer clothing, etc. ( thus arguably providing a psychological boost for high skill level individuals stuck working at low skill level jobs ), those increased earnings are still insufficient to allow that 30 year old to 'step up' from shopping at Walmart, Hyundai, MacDonalds etc. for 'routine' purchases. And, just as obviously, that 30 year old still doesn't have thousands of dollars available for spending on such 'non-essential' items as lap dances and webcam sessions.

    Also, as the author points out, the chart understates certain aspects i.e. American workers who were formerly in the $60k+ earnings quintile who have now 'fallen' into lower earnings quintiles ... who certainly outnumber the number of American workers who were formerly in lower earnings quintiles rising to the $60k+ earnings range !
    Last edited by Melonie; 02-09-2014 at 07:30 AM.

  13. #13
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: 'The First Domino To Fall : Retail"

    here's another update ... from our 'old buddy' Karl Denninger at


    (snip)"Amazon's recent quarterly report and their "warning" that they are "examining" looking at raising the cost of Prime, along with a recent survey that far less than half of customers may retain Prime if they raise the price by $40 a year is not the whole story.

    It's actually much worse than you're being told.

    Amazon has long delayed shipments on their "Free" shipping option for a day or two in many cases, probably in the hope that you'll order something else in that day or two and they can stuff them all in one (small) box to save them some shipping money. I've seen that over the years.

    But the level of "cost-avoidance" they're engaging in now has gone from "ordinary" to outrageously extreme, and I believe it is going to have a severe impact on customer satisfaction.

    I now have documented cases of them sitting on orders for a full workweek when people choose "Super Saver" shipping before they actually dispatch packages. And we're talking about relatively cheap things to ship too -- a handful of DVDs, for example, but enough to qualify for their "saver" shipping.

    That's right -- five days for items that are in stock and yet they do not ship for a week, then they're sent "Smart Post" (which is FedEx's bastard hybrid that is actually slower than the US Postal Service!)

    America is drunk on "haveitnow"; there is no way Amazon will retain customer loyalty when they're sitting on shipments for a week before dispatching them. Add to that "Smart Post" delays and you're talking about somewhere between 7 to 10 days before your order arrives.

    If they keep this up customer satisfaction and thus sales are going to collapse.

    It would appear that Amazon's margins are in freefall and so is their free cash flow as the cost of shipments rise and their high-margin media business continues to slow in momentum. As a result they're obviously trying to force people into "Prime" -- but Prime, at its current price point, is a money loser.

    This company, with a P/E of 605, is in trouble. Big trouble.

    Don't be long the stock when the market figures this out."(snip)


    The seemingly important take-away from this article actually pertains to the main 'counter-argument' about 'brick and mortar' retailers above ... i.e. that falling sales / profits at 'brick and mortar' retailers is due in large part to additional loss of retail market share to the 'online' retailers ... of which Amazon.com is the largest. However, if that were in fact the case, one would expect Amazon to be reporting increased profits ... something which did NOT happen in their latest Quarterly filing. Beyond that, as pointed out in this article, Amazon is now apparently reaching for ways to shave 'costs' ... apparently at the risk of increased customer dis-satisfaction.

    If 'brick and mortar' retail sales / profits are down, and if the largest online retailer's profits are ALSO down, this points back to one of the original claims of this thread ... that, for previously discussed reasons, Americans are simply running out of 'discretionary' money to spend on non-essential items. Generally speaking, this is not good news regarding the future health of the US economy ( despite official statistics ). Specifically, this is not good news for dancers and camgirls who are completely reliant on customer 'discretionary' spending for their incomes.

    Well, in truth, there is a large exception. High end / luxury retailers are booking record sales and profits, at the same time that mid-level retailers are experiencing declining sales / profits. This appears to be driven by the fact that the 'top 10%' of American earners have reaped the lion's share of any US economic improvements over the past several years. Some statistics actually show that the 'top 10%' of American earners have reaped ALL of those US economic improvements.

    In regard to decisions re Amazon or any other investment, as always do your own due diligence.

  14. #14
    God/dess Zofia's Avatar
    Joined
    Apr 2002
    Location
    Durham, North Carolina
    Posts
    2,417
    Thanks
    2,964
    Thanked 2,370 Times in 934 Posts

    Default Re: 'The First Domino To Fall : Retail"

    Quote Originally Posted by Melonie View Post
    Some statistics actually show that the 'top 10%' of American earners have reaped ALL of those US economic improvements.
    Yes we have, thank you very much.

    Cheers,
    Z

  15. The Following User Says Thank You to Zofia For This Useful Post:


  16. #15
    God/dess
    Joined
    Sep 2006
    Posts
    7,964
    Thanks
    6,155
    Thanked 10,183 Times in 4,602 Posts

    Default Re: 'The First Domino To Fall : Retail"

    Quote Originally Posted by Melonie View Post
    The seemingly important take-away from this article actually pertains to the main 'counter-argument' about 'brick and mortar' retailers above ... i.e. that falling sales / profits at 'brick and mortar' retailers is due in large part to additional loss of retail market share to the 'online' retailers ... of which Amazon.com is the largest. However, if that were in fact the case, one would expect Amazon to be reporting increased profits ... something which did NOT happen in their latest Quarterly filing. Beyond that, as pointed out in this article, Amazon is now apparently reaching for ways to shave 'costs' ... apparently at the risk of increased customer dis-satisfaction.
    Amazon isn't looking to increase profits. Amazon's strategy has always been to grow the business rather than increase profits.
    http://www.practicalecommerce.com/ar...-in-No-Profits
    This strategy has worked well for shareholders.
    http://www.forbes.com/sites/maggiemc...enue-increase/

    Quote Originally Posted by Melonie View Post
    If 'brick and mortar' retail sales / profits are down, and if the largest online retailer's profits are ALSO down, this points back to one of the original claims of this thread ... that, for previously discussed reasons, Americans are simply running out of 'discretionary' money to spend on non-essential items.
    Amazon's revenue is way up, which most likely means Americans do have money to spend on non-essential items. Morgan Stanley estimates an increase in Kindle sales of 26%.
    http://bgr.com/2013/08/12/amazon-kin...ales-estimate/
    Quote Originally Posted by Melonie View Post
    Generally speaking, this is not good news regarding the future health of the US economy ( despite official statistics ). Specifically, this is not good news for dancers and camgirls who are completely reliant on customer 'discretionary' spending for their incomes.

    Well, in truth, there is a large exception. High end / luxury retailers are booking record sales and profits, at the same time that mid-level retailers are experiencing declining sales / profits. This appears to be driven by the fact that the 'top 10%' of American earners have reaped the lion's share of any US economic improvements over the past several years. Some statistics actually show that the 'top 10%' of American earners have reaped ALL of those US economic improvements.
    Practically all Americans who own stocks have reaped economic benefits, and over half of all Americans own stocks directly, or through mutual funds. Americans who have been able to buy homes at a reduced price and with low interest rates have also benefited.
    Quote Originally Posted by Melonie View Post
    In regard to decisions re Amazon or any other investment, as always do your own due diligence.
    I agree, but with Amazon, you have to look at a lot more than their profits. Amazon has been successful in creating shareholder value without making large profits.

  17. #16
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: 'The First Domino To Fall : Retail"

    Agreed that much of Amazon's valuation is based on future expectations as opposed to current performance ...

    (snip)"(Reuters) - Amazon.com Inc missed Wall Street's profit estimates for the crucial holiday period and cautioned investors about a possible operating loss this quarter, pushing its shares down more than 4 percent on Thursday.

    The world's largest Internet retailer, which has spent heavily to forge new markets in cloud computing and digital media, expects operating results for the current quarter to range from a $200 million loss to a $200 million profit, compared with a $181 million profit a year ago."(snip)

    However, the actual point about Amazon in the context of this thread was that holiday sales were below expectations. If there was any 'reality' behind claims that reduced holiday sales by 'brick and mortar' retailers are simply the result of sales 'moving' to online retailers like Amazon instead, Reuters would be issuing positive news reports re Amazon not negative. The arguable 'reality' is that, on the whole, Americans now have less 'discretionary' money to spend ... which has 'hurt' both online retailers and 'brick and mortar' retailers. Admittedly, that 'hurt' has not been evenly distributed over all market segments.


    Practically all Americans who own stocks have reaped economic benefits, and over half of all Americans own stocks directly, or through mutual funds. Americans who have been able to buy homes at a reduced price and with low interest rates have also benefited.
    Technically true, but ... it is really only the 'top 10%' of Americans who are in a position to translate rising stock valuations into significant amounts of immediately spendable 'discretionary' cash. Stock values increasing within IRA's or 401k's won't be accessible for decades. And Americans purchasing homes thanks to ( artificially ) low interest rates still have to divert additional cash toward rising property taxes, rising home heating / cooling costs, rising insurance premiums etc. as a consequence of that home ownership, leaving them with little 'discretionary' cash as well.

    Thus dancers and camgirls who depend on immediately spendable customer 'discretionary' cash as their source of income don't benefit from increased customer IRA / 401K balances, nor do they benefit from customer home ownership. Also, while some 50% of Americans may have technically benefitted purely in terms of head count, in dollar terms it is the 'top 10%' who received the VAST majority of additional dollars !!! This is amply illustrated by Mercedes, Tiffany, Gap etc. booking excellent profits.

    (snip)"Daimler [ Mercedes Benz - sic ] reported fourth-quarter and full-year 2013 earnings, and they were impressive -- impressive enough to set records.

    Daimler's fourth-quarter pre-tax earnings of $3.4 billion capped a year in which the German luxury-car and truck maker posted record sales, record revenue, and record profits."(snip)

    Or put another way, a working class guy owning a few thousand dollars worth of stock shares and earning an extra few hundred dollars in capital gains / dividends, still does not allow them to afford buying a Mercedes, or afford buying an hour in VIP !!! Nope, the lion's share of the money being spent on Mercedes and VIP's is coming from 'top 10%' earners who own hundreds of thousands of dollars worth of stock shares and earning tens of thousands of extra dollars !!! Thus the fact that 9 Americans earned an extra few hundred dollars ... but did not spend any of those extra dollars in strip clubs ... is far less significant to dancers than the one American who earned tens of thousands of extra dollars, with some of that being spent celebrating in a strip club !!! The same conclusion arguably applies to other forms of 'retail' spending.

    Arguably, those 'top 10%' earners choose not to shop at mid-level retailers like Penneys and Sears ... in the same way that they are unlikely to patronize mid-level suburban strip clubs. And 'bottom 50%' earners cannot afford to shop at mid-level retailers ... in the same way that they cannot afford to patronize mid-level suburban strip clubs. This explains why Penneys and Sears ... as well as mid-level suburban strip clubs ... are 'hurting' financially, while 'luxury' retailers ... as well as upscale big city strip clubs ... are doing very well.
    Last edited by Melonie; 02-16-2014 at 05:48 AM.

Similar Threads

  1. Replies: 28
    Last Post: 01-14-2011, 05:06 PM
  2. Replies: 13
    Last Post: 09-08-2010, 09:15 PM
  3. "How to Make Anyone Fall in Love With You" by Leil Lowndes
    By redwinekisses in forum Hustle Hut
    Replies: 6
    Last Post: 09-06-2009, 08:27 PM
  4. Domino Day
    By xdamage in forum The Lounge
    Replies: 4
    Last Post: 11-15-2007, 10:12 PM
  5. weekend commentary ... the 'Domino Effect"
    By Melonie in forum Dollar Den
    Replies: 0
    Last Post: 03-25-2006, 04:33 AM

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •