Who can forget the interminable parking lots, crowded escalators, holiday window displays, and jam-packed food courts? The shopping mall is where many of us grew up. From hiding under dress racks, to reluctantly trying on school clothes, and momentarily losing sight of our mothers — all of us have a mall memory. These shopping meccas were so popular in the 1970’s and 1980’s that wading through crowds and swarms of bag-toting shoppers became part of their mystique. We lined up for everything from a rocking horse ride and a stint in Santa’s lap — to video arcades and Black Friday markdowns.
While Austrian immigrant Victor Gruen is credited with inventing the shopping mall back in the 1950’s, it quickly became a uniquely American experience. The sprawling suburban shopping plaza morphed into a people center and a tabernacle of booming U.S. consumerism.
The Great Recession, however, turned malls into ghost towns and triggered the demise of countless anchor stores like: Circuit City, Fortunoff’s, Filene’s Basement, Linens & Things, and Gottschalks. In December of 2008, The New York Times reported that retail sales figures were the “Weakest in 35 Years.”
And now the rise of the shop-at-home/free delivery models of e-retailers like Amazon have triggered a rash of new retail defaults and mega mall closings. This year alone has seen the demise of Z Gallerie, Payless Shoesource, Things Remembered, Gymboree, Perkin’s, Marie Callenders, and Barney’s New York all of whom filed bankruptcy or began liquidation proceedings in 2019. They join last year’s casualties which include Sears, Brookstone, Nine West, Rockport, and the Walking Company.
All that remains of the once humming shopping hubs are cavernous superstructures and dead mall graveyards hoping to be snapped up by an online distribution center or leveled into fresh, commercial real estate. The retail collapse has racked up record-setting store closings and decimated an industry that was once the backbone of the American economy.
So, is the demise of brick-and-mortar retail just a sign of changing times or an indication of something more perilous? There’s no doubt that technology and globalization are dramatically altering the shopping experience. But some believe that the retail industry, which employs almost 16 million people, is now in a recession. And with store closings in the first half of 2019 surpassing all of 2018, the pace of shuttering shows no signs of abating. This begs the question — if we continue to shed retail jobs in a good economy, what happens when the economy turns bad?
Mark Zandi, chief economist at Moody’s, addressed precisely this concern in a recent CNN Business report on the ‘Retail Apocalypse’ stating, “They’ve been laying off workers coming up on three years. And this is a time when consumers are out spending aggressively. If the broader economy is in recession, there is going to be blood in the streets.”
With two-thirds of CFO’s predicting a recession within the next 12 months, the streets may very well run red in 2020. Weakness in the retail sector — the layoffs, liquidations and store closures could become catastrophic and the mounting job losses could quickly spread to other sectors of the economy.
Dead men may tell no tales, as the saying goes — but it seems that dead malls do. And whether the demise of great American shopping centers is the result of changing tastes or shifting times — the disruption to the economy in the event of a downturn could be calamitous.
Grabbing a paperback at Waldenbooks, the latest CD at Sam Goody, or a lava lamp from Sharper Image may be a long-lost memory, but your retirement portfolio shouldn’t be. It needs an active crisis hedge, and gold has a solid history of increasing in value when paper assets like stocks and bonds fail.
With a host of major economies already on the brink — global gold demand could surge in 2020 creating a significant upside. So, while you may no longer be able to pick up a new tennis racket at Sports Authority, you can still acquire a stash of gold bullion from a reputable gold company to protect your portfolio in 2020.