Shhh... Recession forgot to tell retailers it is here...

I think it was more or less that Circuit City was older or had earlier growth than Best Buy. Roughly the same phenomenon as KMART. A great location in the 70’s and 80’s might be transitional or ghetto in the 90’s or 00’s.

I don’t doubt management choices were bad though. Case in point: they did a grand opening in a brand new upscale shopping center pretty close to me. Literally like 2 weeks later they were announcing their bankruptcy liquidation sale (corporate liquidation). Maybe if they had invested in new real estate earlier they might have survived, or it might have been inevitable just because companies like that get bogged down with legacy costs related to “old growth”. Actually now that i think about it - didn’t Circuit City also have their sales people on commission? That made them less fun to “browse” vs Best Buy.

 

Primarily west of the Mississippi, yes. But they were a fantastic store because you could actually buy computer components from them and build your own machine. Online retailers like Newegg kind of made them obsolete. They had a store here in Dallas, and I went to them in Tucson when I lived there. They had a store in Phoenix as well and several in California.

 

I think we are mostly saying the same thing. CC's RE choices were good at the time im sure, but I think they owned much of their property too IIRC making it harder to relocate. The real estate was not worth that much and they were tied to it.

I used to work with one of their former corporate LP big shots he told me that bad management and bad RE doomed them.

 

Frys electronics was based out of Silicon Valley. They were the Costco of electronics. Huge stores that sold everything. A friend of mine used to call it Radio Shack on steroids. But huge box stores that are specialized just can't survive in this environment. Too much competition from discount stores like Wal-Mart and Costco, plus people ordering online from Amazon.

Speaking of ordering from Amazon, Best Buy survived because it witnessed what was going on in its stores and pivoted quickly. People were checking out the equipment at Best Buy, and then ordering it online from cheaper sellers like Amazon. Best Buy decided to turn their stores into large showrooms, and offer price matching plus delivery. Best Buy also offered in store and Geek Squad tech support, which are things Amazon nor any other competitor really offered. It allowed Best Buy to survive.

 

Newegg I had forgotten about them when I was younger and more cutting edge I used to buy components from them and build my own computers.

 

They're still around. I still build my own. Taught my daughter to as well about 7-8 years ago so that she wouldn't fear getting her hands dirty and to start to understand why things worked as opposed to simply that they worked.

 

I posted on this board a couple months ago. A buddy of mine has a freaking huge pallet business. 4 plants in the southeast. They slowed to a halt about 4 months ago. If people aren’t buying pallets they aren’t shipping. He did tell me last week that they had multiple growth weeks so I’m hoping that means a quick rebound.
Either way the market is going to be a decent lag behind them.

 

That would actually make sense as Wal-mart, and particularly Target in recent months had said they had too much inventory or made mistakes in their inventory, they even pre-warned on their earnings. But today (actual earnings) they beat the lowered expectations AND suggest the worst is behind them with inventories. Meaning they probably are back to purchasing again (or at least normalized as they head into the holidays).

Of course as we are heading into holiday season anyway, any “grinding to a halt” was bound to end with that.

 

Yeah big box is doing well while :

A July survey from the Census Bureau, reported by Bloomberg News, found that a staggering “5.4 million households, or 40% of households that are not current on their rent or mortgage payments, said they were likely to be evicted or foreclosed on in the next two months.”

The Biden administration is killing low wage earners.

 

The QE of the Great Recession + the money payouts from the Pandemic are putting us in a no-man's land where the old modeling tools just aren't able to adjust. We'll see what 2023 brings us but so far it looks bleak. China keeps shutting when even one case of Covid pops up. They can't keep doing that or they will continue to destroy any sort of rebound.

 

The China situation was big to the inventory issues earlier in the year. Nothing we can do about that, there’s no government policy for this*. Companies will obviously look to diversify their supply chains but it’s not a switch that gets flipped overnight. It takes months/years to shift production lines.

*I guess unless we want throw billions to subsidize domestic production, as the Chips Act will basically gift Intel and others $10’s of Billions to make semiconductors here. Not a fan. I guess a “national security” argument can be made for chips/semiconductors, but most likely it’s just corporate welfare.

 

Just 4 paragraphs above posters; quoted one is: "The problem is being felt around the world, too. A recent analysis by Bloomberg Economics found that 19 OECD countries have combined price-to-rent and home price-to-income ratios that are higher now than they were ahead of the 2008 financial crisis, indicating that prices have moved out of line with fundamentals."

I was not aware Biden was responsible for rents in 19 other countries.

 

Where did you see that? I'm seeing a conflicting report.

Target profit plunges 90% as inflation-weary shoppers pull back - CNN

 

Wal-Mart beat expectations in yesterday’s earnings announce and said they think the worst is behind them (this was referring to their inventory situation NOT necessarily their EPS). I guess Target disappointed today on all fronts. Target seems to be having bigger issues compared to Wal-mart (previously they were blaming bad product mix for their inventory buildup issues, but now they are blaming inflation).

The reason I was referring to that is that poster said his buddies pallet business ground to a hault. If stores are struggling to clear inventory they are going to slow purchases until they get that cleared out. But as I said, Wal-Mart has said their inventory issues have peaked. So that “makes sense” as far as his buddy starting to see some pallets also start moving again. It is also getting near holiday season, so even if Target has some more clearance to do, they will still need to get things moving for the holidays.

 

Bank of America says the recession is coming, and this one is expected to be "full-blown". I was hoping for a partially-blown recession, but that is not going to happen.

Bank of America shares 12 charts that show that the economy is about to enter a full-blown recession

The symptoms?

1. Manufacturing activity is declining.
2. Lower earnings in the U.S.
3. Lower earnings globally.
4. Steepening U.S. Treasuries yield curve often precedes recessions.
5. Price of oil may be peaking and getting ready to drop.
6. The jobs market often follows manufacturing activity.
7. Global home prices are falling.
8. Banks are tightening lending standards for small businesses.
9. European banks are reducing their lending activity.
10. Weak job market leads to interest rate cuts.
11. Investors too optimistic on rate cuts, not pessimistic on recession chances.
12. Stocks don't do well in recessions (more of a result than a symptom).

To me, it's possible that consumer spending has not fallen yet because people are spending so much on their credit cards. It's going to be rough when the recession hits and the bills come due, with no job to pay for them. I can tell you that manufacturing has been down since the 4th quarter.

 

The recession wont hit until student loan repayments are due. The pause is very much a 1 Trillion+ stimulus for Millennials and Gen Z.

 

My company has seen three terrible months to start the year. It’s been in constant decline since last summer.

 

New and used car prices have risen to a point that they are just unaffordable. Something has to give---