Retail is looking very bleak all over the world, especially bricks-and-mortar shopping centres. One of the UK's largest shopping centre operators (Intu Properties) announced that it was trying to raise a billion pounds on Monday to try and spend money on their aging shopping centres only to be told by the stock-market that their portfolio is worthless. From Wolf Street;
The company’s shares reacted in time-honored fashion, plunging 8% to a historic low of 21 pence before ending the day down just 1%. Intu’s share price is now 80% lower than it was a year ago and 95% lower than five years ago, leaving the group valued at just £306 million.
Intu owns dozens of malls in the UK, including nine of the 20 biggest ones, and a handful in Spain. It describes itself as a commercial real estate company that is “in the business of helping customers and brands flourish, whether that’s through leasing space in our prime retail and leisure destinations, commercialisation activations or online through our multichannel platform intu.co.uk.” The problem is that many of its clients — mainly large bricks-and-mortar retail chains — are not exactly flourishing; they’re either battling for survival or going out of business...
...The company has £4.7 billion of debt on its books that it cannot service under current conditions, which is why it is asking shareholders to stump up an extra £1 billion of capital. But just how willing will investors be to inject funds worth more than three times the market value of a company whose shares have already collapsed 80% in the last year, at a time when the UK’s retail sector is in the deepest of doldrums?
You could blame the advent of internet shopping for the tough times in retail but the situation is the same all over the developed world; bricks-and-mortar shops can't turn a quid so you've got to conclude that rents are simply too expensive. There's got to be a write-down in the value of the real-estate (and therefore the rents) that these shops occupy or they won't survive.
Actually I do very much blame online shopping as do most.https://www.statista.com/statistics/379046/worldwide-retail-e-commerce-sales/
Malls are filled with mostly female fashion, which is rapidly going on line and decreasing price electrical goods. Toys are being replaced with Playstation and tablets etc.
Its not just growth in online trading but decline retail prices in general reducing profits. If I recall correctly, a present I bought for my GF in 1990 was a denim dress and matching jacket from Just Jeans, cost me around $250 on sale and the number I recall because it was the same amount as my previous weeks take home salary. My wife bought something not too dissimilar denim dress recently online, cost A$70, so much for 30 years of inflation?
My wife also just bought online, 4 or 5 pairs of leggings, both causal, dress and exercise. Don't ask me whats the difference, I cannot tell, cost $60 delivered. She's an Project Manger and on Thursday's (same as casual Friday) often wears a dress that she bought on ebay that cost less than her lunch and its 2 years old. She says womens fashion has become alot cheaper and simpler. Go out at night and most people don't dress alot different than during the day, yes the odd one or two is glam'ed up and Dubai does Glam in a big way, but she often wears a dress bought on ebay for less than her first 1-2 drinks. I'd say half my wife's clothes are ebay near new, 2nd hand or sold new with part label removed (excess stock) Many online fashion shops now allow previous buyers to post photos of wearing the items so you can see a what it looks like on a real woman in average lighting, not some Glamazon in a studio.
Listening to the business radio show talk on this very topic, many career women say they now buy on line as they don't have time to wander around a mall. They stick to brands they know as they know and stuff they don't is usually forgiving in style or easily returned or such a low price it doesn't matter. We go into a mall about 3-4 times a year to buy clothes and just filling the gap of what we get on line as I'm very tall with big feet and buying kids clothes online with my DNA is also often not a good outcome. Most of our electrical stuff is bought online, even the parts to repair my kids chromebook.
Online shopping is also a very quick way to price compare, no more walking into different shops. Hell I've bought online while standing in the shop looking at the same TV for 20% more.
Tesla sells most of their cars online although you can book a test drive and they give you 7 days 100% refund option after delivery. I bought my near new Ford Ranger Wildtrac without even bothering to ask for a test drive, found it on line in dealer, did my research and took family in for a test seat for them and me, then wrote a cheque.
The only thing I would always (for now) go into a shop for is Bunnings, my hobbies and food, although we could easily order online our regular stuff here.
Malls need to transform themselves from shopping to entertainment, meet & greet centres or face closure.