Although the Boulder, Colorado area where we live has been spared the Great Recession’s worst ravages so far, an unprecedented number of local businesses have nonetheless gone under in the last year or so. We’ve grown used to seeing our favorite restaurants fail one by one, and we’ve even accepted the likelihood that only a relative handful of independent restaurants and retailers will survive these hard times. But Sam’s Club!? We’d thought the warehouse club’s sales would remain rock-solid in hard times, but apparently not. Yesterday, the parent company, Wal-Mart, announced it’s shutting down the Louisville, Colorado Sam’s Club on January 22, along with nine other stores located elsewhere in the country.
Like so many other local businesses that have failed in recent months, there often appeared to be enough shoppers in this particular Sam’s Club to keep things going until the economy improves. Apparently not, however. The store was losing money, according to a company spokesman, and there’s no way it can remain open under the circumstances. 128 workers will be affected, although Wal-Mart has promised to try and relocate them to other Sam’s Clubs in Colorado.
Binging Is Dead
The store itself occupies a 127,000-square foot building situated between a Kohl’s department store and an Albertson’s. What will become of this huge space? It’s hard to imagine, since few retailers generate the kind of sales it takes to pay the rent on a 127,000-square foot building. The same problem is likely to crop up in hundreds of towns across America: How will they recycle big-box stores when they go dark? The answer to this question, assuming there is one, suggests that America’s emergence from deep recession will not happen quickly. Ours is an economy than runs on consumption, after all, and it may be many, many years before Americans binge once again.
Even so, the spinmeisters speak of recovery as though it were happening right now and will be going gangbusters by spring. In reality, it could take decades for retail businesses in this country to grow into the huge spaces that have been vacated. When Lord & Taylor abandoned a huge, multi-story structure at the local mall, the space sat vacant for six years before it was subdivided for two smaller tenants. A bigger picture suggests the big- box concept itself may be dead, since the number of retail players who can turn a profit in a 100,000-square foot facility has dwindled to just a few. Will the unused buildings eventually be torn down? Or will they perhaps be subdivided for flea markets? Halloween has been bringing them back to life for a month or so every fall, but the costume business may have reached the saturation point in 2009. Maybe next year the “Halloween & Christmas Store” will be the thing?
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FranSix wrote “negative overnight interest rates are going to take everyone by surprise.”
That would surprise me. I suppose if the Fed took short term rates to zero funds would go into longer maturity debt, commodities, and stocks.
What things do you see happening to cause this action of negative rates?