Warehouse Stores
 

Malls are dying. Online retailers need more space closer to consumers.

My solution: turn malls into warehouse stores. Turn old shuttered KMarts into Amazon stores. Turn JC Penneys into TireRacks....

https://www.bloomberg.com/news/articles/2017-11-20/robot-makers-fill-their-war-chests-in-fight-against-amazon

I met a guy once that thought the master plan was to turn old stores like that into prison camps under the new world order. It was too much..

On-line retailing is a seasonal business. It's easy to hire workers for 3 months of the year and then kick them out. If you have a robot that just sits 9 months out of the year you are still paying for it for 12 months while it just sits. If the new tax plan allows companies to expense capital investment in the first year you can see robots really take off.

Problem with the old malls and KMarts is they're in the wrong part of town and they are in need of roofs, a/c, electrical won't support current IT needs.

Our local "mall" has such a huge rent demand from a obstinate owner, he has single handidly killed off 75% of the viable stores. Malls were a big thing before online shopping became so easy. Not too many people want to brave the elements, traffic, and high prices of retail, when they can shop comfortably from their living rooms, with the obligatory pajamas, while actually saving time, and money.

The mini-malls are still doing great.
One-stop shopping does have it's environmental and efficiency benefits. Capture the customer to slow them down and push through the pre-arrainged maze. You didn't remember you needed something until you saw it on the shelf right there. You are busy enough so it's easier just pay a little more and no need to make a second stop just to save a few bucks on that one single thing sometimes. It's a game.

Meijer, Walmart, Costco, etc have all the inconvenience of with most food + basic household items. It's not the place to find specialty high end items but covers 50-95% of daily life for most of us. Some like Costco in particular have expanded into cross-over hybrid business platforms like group insurance and roofing and auto sales etc.

The traditional mall is made for people with free time to walk around a mile or so through the specialty boutiques. Who has the inclination to spend an afternoon shopping in one place? Or the inclination? Time is speeding up and people are busier and expect more these days. It's not the 70's anymore.

And even then the top magnet stores may turn rancid, such as Sears who held back stocking millions in merchandise, and start selling chinese tools, and to push their own customers online again where they got crushed. Meanwhile the big boxes and harbor fright did a 1-2 from the side to finish them off.

So there is only Marshals, JCPenny, TJ Max and whatever left to support the smaller mall gimick stores. They will need the bling and the chocolate stores to keep it fun as well. Clothing was always best bought in person..I thought..but who knows maybe that will change as well?

I local mall turned a closed Macy's/whatever to a datacenter. Seems like a strange transition but I assume the price was right and I expect their is less turnover. I suspect we'll see a similar mixing of retail/tech/light industrial like a gym or garden center.

I was part of Costco's audit team at the start back in the 80's. At that point and for many years they catered to local small business and over 70% of their sales were wholesale. I don't know what that mix is these days. My stepson works there and is convinced on line shopping will eventually kill them unless they adapt to improve their on line experience and even that may not help. I think he may be overstating things. Their warehouse real estate model is pretty low cost unlike the big mall model with very expensive buildings to maintain.

Walking around Costco the other day, I realize that it is on the verge of the Christmas shopping season, and it was a Sunday early afternoon, but the sheer amount of employees working the floor was staggering, with one on every isle handing out samples, and many more in each department.

I don't think these numbers are sustainable against online shopping, but it did allow the public to try the samples, and get questions answered face to face, so maybe that outweighs the inconvenience of traveling/parking/spending time/ in the store.

I believe the sample folks are employees or contractors of the product company they are pushing. Costco gives them the floor space but doesn't pay their wages. Same with the kiosk folks selling phones or pushing DirectTV. They have way fewer employees per sq. ft. than a traditional retailer.

interesting jhynes. that would make sense.

warehouse clubs are moving more towards the swap meet model I think. not good IMO.

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Costco probably charges for the floor space they are using. Lots of products - especially short shelf-life items are in the store basically on consignment. The distributor's employees stock the shelves and rotate stock. And if you want your product at eye level, or kid's eye level, you pay a premium. Magazines pay a "pocket fee" for placement in book stores. You pay more for premium placement.

We paid a ton for Modern Dad to be at the cash register at all B. Daltons. A million years ago.

^^^^What I know - I don't think so. My understanding is their business model is very narrowly focused, product-wise. Where they only offer 2- 4 different ranges of the same products and the margin is greater Vs the average store offering in a single product line may be a high as 25-30.

They cary very minimal in-store inventory, and rapidly move the items they do shelve. I don't think they're going anywhere, anytime soon.

Love/hate relationship with Costco. Got some pretty good cheese there a couple weeks ago. Went back last weekend to get some more, gone. They have some of the same stuff for years but usually what I like is short lived. Its funny how we/I get into a routine. Costco stop most weekends and then amazon for most other things. Cant remember the last time I shopped at a mall.

I believe Costco owns the company that employs the sample folks. They are paid quite a bit less than what a regular employee gets.

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One other thing that may stifle mall-to-warehouse conversion for on-line operators is taxes. Some states, California in particular, require that on-line merchants charge sales tax if the company has a physical presence in the state. If not, the California buyer who purchases something sales tax free, is supposed to declare the purchase/tax liability on their state tax return (yeah, right.) Having a warehouse within the state would obligate the seller to charge sales tax, thus reducing the price incentive.

Don't know how many states have similar laws, but in California it plays a role in whether or not an on-line company has any physical facilities here.