Headline: Anchors Away: Andrew Weiner on empty Wal-Marts and the blight of big-box retail

Source: Feed Magazine, 8 Mar 2001 URL: http://www.feedmag.com/templates/default.php3?a_id=1643

Imagine a store the size of an airplane hangar that sells only the things you can't give away: a store with a pharmacy stocking nothing but No-Doz and enema kits, a footwear section that solely sells mismatched socks and single flip-flops, and a toys aisle picked clean of all but the Men Are from Mars, Women Are from Venus board game. A store so empty that restless kids have converted whole aisles into soccer fields and scooter racetracks. A store so cash-poor as to sell its shelves, its shopping carts, and even, for the right price, its lease. Or, if you'd rather not play make-believe, just go to virtually any nearby mall and see for yourself.

In the last two months, an unprecedented number of big-box chains have been forced to liquidate assets, lay off workers, close stores, and declare bankruptcy. Industry analysts blame the shake-out on anemic holiday sales, but also point to an unsustainable expansion. In the last twelve years, per capita retail space has increased by one-third, outpacing the purchasing power of average consumers. Late last December, Montgomery Ward filed for Chapter 11 and was soon joined by the Northeastern discounter Bradlees. "Anchor" stores J.C. Penney, Sears, ShopKo, Office Max, and Ames stayed solvent, but have all announced substantial cutbacks and closures. The record-setting number -- and size -- of these liquidations point towards more systemic problems within the industry; the likelihood that a chain retailer will default on a debt has doubled in the last year alone. It's enough to have both analysts and consumers wondering if the sign of the times should read EVERYTHING MUST GO!

Few tears will be shed, least of all by the small-business owners forced out by the advent of the category-killer store. But these events have fed into the growing concerns about the country's economy as a whole. Since consumer spending accounts for two-thirds of all national economic activity, the retail slowdown has come to figure as a leading indicator of future trends. Recent polls have marked a precipitous decline in consumer confidence. Sales of durable goods are at their lowest in ten years, and the closely watched University of Michigan survey of consumer sentiment dropped in February for the fourth consecutive month, posting a satisfaction rating very nearly that of July 1990 -- the start of the last recession. It's widely assumed that recent Michigan results influenced the Fed's decision to lower interest rates. Yet a closer look at the polls shows that consumers aren't dissatisfied with present conditions so much as they’re dreading the future. If this sudden pessimism has CNBC copywriters scrambling to find a catchy antonym for "irrational exuberance," it also highlights the extent to which national economic policy depends on the collective whims and fears of consumers -- as construed by a monthly series of phone interviews.

Perhaps this fickle and short-term sense of collective interest explains how big-box retailing got to be so big in the first place. How else to reconcile ninety-nine-cent Pokemon dolls with a marketing scheme that clear-cuts communities? A recent visit to a Boston-area Bradlees liquidation made it clear that the only thing worse than opening a big-box store is closing one. The store's refusal to take returns or honor warranties created throngs of angry customers and sullen clerks. The only happy face belonged to a shopper who supplements her living by "returning" liquidated wares back to other retailers.

Layoffs are only the beginning -- the loss of an anchor store reduces foot traffic in a mall, thereby depriving its smaller businesses of customers. Worse, there's no guarantee that another chain will take its place. Often ownership will decide to let a defunct franchise stay empty so its competition can't move in. Wal-Mart, the nation's most successful retailer, alone accounts for some 380 vacant stores. The National Trust for Historic Preservation estimates that fully ten percent of available retail space lies empty -- that's half a billion square feet. When big-boxes are left unused, the blighted ghost malls that remain depress property values in nearby communities, leaving local residents the victims of a bottom-line decision likely made in a boardroom halfway across the country. The situation makes a loser of everyone except constipated, barefoot, overcaffeinated fans of self-help board games, who probably didn’t need the help to begin with.

-- Andre Weltman (aweltman@state.pa.us), March 08, 2001