STOCK MARKET CRASH OF 2017?! ? What Is Causing The Retail Crash…

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We are seeing the start of a market crash in 2017. The retail market is crashing and there are three main reasons why retailers across the board are struggling, many of them declaring bankruptcy and closing hundreds of stores. The last two years have been abysmal for retailers. There have been nine retail bankruptcies in 2017 so far, that is equal to the number of retail bankruptcies in 2016 altogether. JC Penney, Radioshack, Macys and Sears have all announced massive store closure efforts. Retail stocks like Lululemon, Urban Outfitters and American Eagle have hit multi year lows.

Is this retail crash being caused by a recession in 2017? Absolutely not.
1. Gross Domestic Product has been growing for eight years straight.
2. Gas prices are low.
3. Markets are at all time highs.
4. Unemployment is under 5%.

What is causing the Retail Crash of 2017?

1. Online Shopping

Amazon is destroying storefront retail. From 2010 to 2016, Amazon’s sales went from $16 billion to $80 billion. Consumer Intelligence Research Partners found that nearly half of US households have an Amazon Prime Membership now. Online retailers like Warby Parker now have an easy return policy making online shopping easy, cheap and risk free. Mobile shopping has gone from 1.8% of digital spending in Q2 2010 to 20% of digital spending in Q3 2016. The era of the incidental purchase is over, as less product is purchased at stores. The shopping habits of the consumer are being restructured.

2. Shopping Malls are DEAD

The truth is, we built too many malls in America. The number of malls in the US grew more than twice as fast as the population in the US between 1970 and 2015.

“Gross Leasable Area” – amount of floor space available to be rented in a commercial property (total floor area).

The US has 40% more GLA per capita than Canada, five times more than the UK and then times more than Germany. Cushman and Wakefield found that mall traffic declined 50% between 2010 and 2013. When an anchor store like Macys closes, all the straggler traffic to the smaller stores diminishes magnifying the effect. The closing of an anchor store has the potential to bury an entire mall.

3. There is a Spending Trend Shift

Consumer spending in clothing has declined 20% this century. However, travel and hotel companies are flourishing right now. Since 2005, sales at food services and drinking places have grown twice as fast as all other retail spending. In 2016, Americans spent more money in restaurants and bars than the grocery stores. This is largely attributed to the share everything society we live in today, where consumers are more concerned with social media moments and not the brands they represent on their shirts.

These are the three main factors that are contributing to the retail crash of 2017. As we see retail giants pull out of shopping malls, the smaller stores will likely suffer or close as well. The effects of this on commercial real estate are concerning. Is this the writing on the walls for a commercial real estate crash?

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SOURCE:
https://www.theatlantic.com/business/archive/2017/04/retail-meltdown-of-2017/522384/

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Comments

Underdog Rising says:

I would never invest in retail unless it fits a very specific checklist. I was thinking about buying shares in Costco. I think it fits a niche. They are great to their employees. They specialize in large items that usually have higher shipping rates online. Their #1 in reviews for cheap glasses so they can withstand the Warby Parker phase I hope. Plus they seem to have a lot of growth potential. I'm not an expert in investing so opinions would be valued. What do you guys think about Costco?

Josh Bullard says:

great video and you are dead on about traveling and experiences over materialistic stuff. We save to travel and only buy clothes and other stuff on the cheap.

smolville says:

I disagree. The kids have no money because of student loans and the high price of school. Also the high price of rent.

Tyler_Plurden says:

Atlanta fed just reported a gdp of .2% been going down every month now. Recession is right around the corner. To say things are fine and dandy is just crazy. True unemployment is almost 40% 95 million people in america are not working. Stocks are at record highs these are all signs of a bubble similar to 08. Online sales are def contributing to retailers closing but its not the only reason.

coolguy98 says:

Shrinking demographics, automation, baby boomers retiring. Millions of immigrants are leaving due to both Obama and Trump policies. When 20 million illegals leave the US, and they will, retail slows down. The babyboomers are retiring, they form a significant portion of the US population, they are spending less, saving more, going into retirement. Automation, many products are cheaper to buy online, quicker, more availability. Online shopping makes people feel less like criminals than at stores, Walmart checks for receipts, best buy takes people to security after buying big items.

St. Maurice of BlackMenWinning says:

Great video. You explained things well, even to a layman like me. I still shop at stores just to get out of the house.

Patrick Fischer says:

I guess on the bright side,from the ashes springs new life,all the vacant commercial property may be the fuel for new innovative upstarts of some sort or another,maybe it could be used for other purposes a mall could become low cost housing units or something like that??

Sergio Hernandez says:

Your brilliant dude keep it up. Didn't think of the share everything society. I know I'm just wanting to travel while I wear about $50 worth of clothes and $100 shoes. When I was a teen I cared so much about name brand clothes.

Andy Kibler says:

Clear, concise and informative. Well done sir.

rick frici says:

very good!!!

dan roth says:

Outdoor malls seems to be the new indoor mall. Sears, JCP, RadioShack, Kmart ect have been antiquated for years!

dapunisher1000 says:

Lmfao….. if you think Amazon's 80 billion in sales is the reason you're an idiot…. retail is over a trillion dollars in sales….. 80 billion is less than 1% of total sales… online retail is a fraction of total retail….. your whole analysis didn't look at total spending which is decreasing and has been doing so since 2011……not one of your analysis is looking at total sales…. you wanna be economic experts on youtube crack me up….. companies like JCP, MACY'S, SEARS, RADIO SHACK, and etc all have seen sales decline……get it sales decline…… Amazon did not pick up all their business share not even close….

lostfile says:

Finally someone that doesn't directly blame trump and fucking knows what he's talking about well at at least he sound like he dose

Erick Umana says:

Great video! Really informative. Keep up the good work

McLuhan's Cool Radio Media says:

Wages are not keeping up with (real) inflation.
Jobs are not as remunerative as formerly.
Rents / Utilities as % of income higher than formerly.

Gabriel Nunez says:

Hey Ryan I recently started watching your videos, thank you for sharing such valuable information in a clear and understandable manner! If there's one way you could improve your videos it would be using visual aid, other than that your content is gold.

StormwaterJay B says:

Response to the video: DUH

StormwaterJay B says:

largest stock market crash will occur at end of 2018. Be ready.

Charles H says:

Hi Ryan – first time viewer here – I definitely liked your presentation and subject material. I'm going to subscribe and see what else you have to offer. Keep it on point and straightforward and I'll be a faithful subscriber. Take care.

Joseph Persie says:

Do you seriously believe that unemployment is really 5%?

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