“The mall is more or less dead except in 279 great cases where we’ve got fabulous malls out there,” says legendary retail analyst Jan Kniffen. “But the 1,100 malls they’re struggling. It’s the levered retailers and the mall-based retailers that are struggling. We’re going to have 26 retail bankruptcies this year. But in a downturn, we could see 100 and we’re going to see 12,000 stores closed this year. It will be the highest number that’s ever closed in history. But we could see 50,000 close in a downturn. It’s because we don’t really need those retailers and we don’t need those stores because the business is moving online at a fierce pace.”
Jan Kniffen, CEO of J Rogers Kniffen World Wide, says the mall is more or less dead as consumers move their shopping to online platforms at a fierce pace. Kniffen was interviewed on CNBC:
The Mall Is More or Less Dead
We’ve had really good retail reports. Think about it. Walmart was fabulous. Target was fabulous. Home Depot was good. Lowe’s was good. Just run down through the group that has already reported and, in general, if you weren’t mall-based full price you did great. Off-mall did great, online did great, and discount did great. The retail market and the consumer couldn’t be better. Levered mall-based retailers are dead. The mall is more or less dead except in 279 great cases where we’ve got fabulous malls out there. But the 1,100 malls they’re struggling. They’re running down comps. The mall is not the place to hang out anymore. Now you hang out in front of your computer and then you go with your friends to do something like go to restaurants and you don’t care about hanging in the mall.
But the people hanging in the mall were never the people that bought the stuff in them. All the people who bought the stuff in the mall were all the women in America who went to work for the first time in the 1980s and blasted them all to the ceiling. We pulled everything out of the mall except for women’s apparel for all practical purposes and that has now settled into this nice slow roll. People don’t dress for work anymore and the malls not any fun and there’s plenty of other alternatives. Just 20 years ago when the mall was really booming we didn’t have a strong T.J. Maxx and Ross stores and Burlington stores. The stuff across the street from the mall was very boring in those days. Those are really good retailers today.
Business Is Moving Online At a Fierce Pace
The two best retailers in the world right now are Costco and Walmart. They are big, strong, have super supply chains, and can handle the tariffs no problem. They’ll gain market share under tariffs. They can even handle a downturn in the economy because they’re both super well-capitalized. Even people like Macy’s that have been struggling, they can handle a downturn in the economy because they’re not levered. They’ve got plenty of cash flow. They pay a 10 percent dividend and they buy back stock.
It’s the levered retailers and the mall-based retailers that are struggling. I keep saying we’re going to have 26 retail bankruptcies this year. We just got two more to talk about. But in a downturn, we could see a hundred and we’re going to see 12,000 stores closed this year. It will be the highest number that’s ever closed in history. But we could see 50,000 close in a downturn. It’s because we don’t really need those retailers and we don’t need those stores because the business is moving online at a fierce pace.
We Know That Everybody’s Getting Out of China
We know that everybody’s getting out of China. They were getting out of China before the tariffs started. Now they’re just getting out of China faster. Yeah, the shoe guys are still getting 60 percent of their stuff out of China but it used to be 90 percent. The apparel guys are still getting 15 percent of their stuff out of China but it used to be 50 percent. So that’s already happening.
The tariffs have not been that big a deal. Tier four, the new tariffs that are about to kick in, if they kick in, would be a big deal for my world. But maybe they’re not going to kick in, which is the other thing that’s going on. We’re not really sure it’s going to happen but it’s still causing everybody to move faster out of China. So Trump has accomplished what he wanted to accomplish. He’s getting American business out of China.