Bloomberg Validates Our Concerns That Store Closings Have on Real Estate

For the past year, we've been saying that the retail sector is in trouble, and that the potential impact of Amazonification and the retailpocalypse will be felt in other sectors. 

Our primary concern is that as big box retailers often support local newspaper through ads. So that as an expected 2,500 retail locations shut down through early 2019, there will also be a cut in ad buys in local newspapers. 

That downturn in ad revenue will likely hurt smaller local newspapers.

And that may lead to local newspapers either laying off staff, shifting from a daily to a weekly, or from a weekly to twice-a-month, or shutting down completely.

That could lead to an increase in what are being called new deserts -- communities that don't have access to local news. 

All of that has an impact on PR and marketing because there would be fewer outlets with which to reach key audiences.

But we've also been concerned that the number of store closings will also impact real estate, both at malls and in towns. At malls, we've felt the problem is that if an anchor location remains empty, the entire mail will be written off by consumers. And that precipitates more closings, which becomes a self-fulfilling prophecy that leads to a downward spiral.

In a Bloomberg News article yesterday that was syndicated into a number of papers, including the Boston Globe, "Struggling malls at crossroads as Sears makes exit," reporters Patrick Clark and Justina Vasquez made that same point:

"As Sears shutters stores, landlords will have to overcome the perception that the entire property is failing or risk losing other tenants, said Burt Flickinger, managing director of Strategic Resource Group, a retail-advisory firm."

“You’re going to see an epic hollowing out of the retail malls in America, especially the malls that are co-anchored by Sears” and another struggling large retailer, Flickinger said. “It’s creating an accelerating retail ice age and an economic Armageddon of unprecedented proportions in the US.” 

That's got us worried.

Retail is an important sector for the U.S., and not just to buy things. Retail can a communal activity whereas shopping online is not. And Bloomberg has reported on the negative impact on local towns in the U.K., when shops have closed on main street, and residents then have to drive thirty minutes or more to buy things they once could in their home town. Those towns suffer because there's literarily nothing holding people there.

So, a lot of doom and gloom -- and you don't have to be a big shopper to see that this can affect you. We don't necessarily have a solution. But we feel that raising the issue is important, that discussing this can help lead to awareness. If we ignore the retailopaclypse, it's not going to go away. 

Birnbach Communications' Top Predictions for 2014, Part VI: General News Stories

Here's our list of general news stories we expect to see in 2014.

1. More interest in workplace diversity. Spurred by SNL's hiring of two black women comedians (at press time SNL had not hired any black comic/actress this season but we expect they will hire two black actresses), we think there will more attention paid to diversity in TV shows and movies, and that this could lead to a larger discussion about diversity in the non-celebrity-filled workplace. 
2. Growing Hispanic influence. This is a demographics story, one that will get mentioned a lot in the run up to the midterm elections, especially if immigration reform gets discussed. 
3. Real estate market. Along with the retail sector, the media likes to look at real estate to determine how the economy is really going.  Expect a look at renters v. owners, and the impact of housing prices across the country. We also expect more interest in urban real estate as companies will say goodbye to the 'burbs to attract qualified employees. 
4. The new Thanksgiving tradition is shopping on Thanksgiving.  As much as we don't like it, from here on in, the Christmas shopping season will probably start Thanksgiving Day. Implications: This changes retail stories told in Q3. 
5. Stock market and the biotech bubble. 2014 will be marked by concerns about the health of the stock market. Of the different sectors, rising biotech shares will generate growing concern of a biotech bubble. That concern will affect all parts of the industry, especially startups as VCs start getting nervous about their portfolios. Implications: There’s not much publicly held companies can do – except, as a Forbes reporter once told us, have you company “do better…and boost its share price.” We just think it’s important to understand how editors allocate their resources (reporters’ time and the outlets’ news hole).

Tomorrow we'll issue our list of ongoing (continuing from 2013) news stories we expect to see.

Let us know if you agree or disagree. Click here for Part I, Part II, Part III, Part IV or Part V.