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Speaker 1: This is a Bloomberg Business Flash from Bloomberg World hand Quarters.
Speaker 1: I'm Charlie Palot. What a difference a day makes. Stocks
Speaker 1: tumbled from the biggest gain in two months today, Disappointing
Speaker 1: numbers out of Disney and Macy's raised outs about the
Speaker 1: strength of the American consumer. SMP five hundred index down
Speaker 1: one percent, falling nineteen points. Nass Stack also down one percent,
Speaker 1: dropping forty nine points down, Industrials down two hundred seventeen
Speaker 1: a drop there of one point two percent. The ten
Speaker 1: year up eight thirty seconds yield one point seven three percent,
Speaker 1: Gold up fourteen dollars the ounce to twelve seventy eight,
Speaker 1: gain of one point one percent, and crude up a
Speaker 1: dollar forty two a barrel forty six oh eight. Again
Speaker 1: there of three point two percent. I'm Charlie Pellotton. That's
Speaker 1: a Bloomberg Business flash. You're listening to taking stock with
Speaker 1: Catholic Days and Pim Fox on Bloomberg Radio. Is the
Speaker 1: US consumer just running out of gas? Or are the
Speaker 1: nation's biggest retailers just losing ground? To the biggest online
Speaker 1: retailers like Amazon, Macy's, renewing concerns about the retail industry
Speaker 1: leading to a stock route for many companies from Walmart
Speaker 1: to Ross stores, the share price closing down to thirty
Speaker 1: one dollars and change today. Joining us now to put
Speaker 1: it all together is Bert Flickinger, Managing Director, Strategic Resource Group,
Speaker 1: joining us in our New York studio. So, Bert, let's
Speaker 1: just dive right into Macy's. Are they doing something wrong?
Speaker 1: Are they? Or is it just the fact that the consumer,
Speaker 1: no matter how how much you hit it right on
Speaker 1: the bull's eye, just isn't spending right now, Kathleen, Macy's
Speaker 1: is doing just about everything right. But to your point,
Speaker 1: no matter how much the consumer would have saved in
Speaker 1: gasoline over the last year, that still doesn't offset having
Speaker 1: an essentially zero interest rates and bank accounts and load
Speaker 1: and no interest rates. So consumer literally has to save
Speaker 1: three to four percent more per year for retirement or
Speaker 1: for weddings or whatever it is. So that comes directly
Speaker 1: out of consumer spending, and Macy's and the others are
Speaker 1: taking a tremendous toll. Is Shue and Charlie Pellett referenced Bert,
Speaker 1: I want to get sort of an understanding of the
Speaker 1: online commerce world because a Warren Buffett, chairman of Berkshire Hathaway,
Speaker 1: at the April thirtieth annual meeting, this is what he
Speaker 1: said about Amazon. He said, it's a big force that
Speaker 1: will disrupt more businesses. Now, let's just concede that he
Speaker 1: does own two percent of Walmart. But he said if
Speaker 1: I owned a bunch of shopping malls or something like that,
Speaker 1: I would be thinking plenty hard about what they looked
Speaker 1: like ten or twenty years from now. You also said
Speaker 1: they have a really Amazon has a real advantage because
Speaker 1: it has intense focus on having hundreds of millions of
Speaker 1: generally very be customers getting very quick delivery. That doesn't
Speaker 1: sound like a ringing endorsement for a brick and mortar
Speaker 1: store like Walmart. Definitely not for Walmart, not for Walmart
Speaker 1: dot Com. And it's all of us forecast for Bloomberg
Speaker 1: and two thousand seven, the retail recession that lasted the
Speaker 1: balance of this this decade. We've also all forecast the
Speaker 1: retail accelerating retail ice age. It's continuing now from nineteen
Speaker 1: and Buffet's point, at the Berkshire Hathaway meeting. You'll have
Speaker 1: a number of shopping centers filed for bankruptcy and liquidation, uh,
Speaker 1: number of retailers, and they're gonna be catastrophic consequences for
Speaker 1: the public sector because you'll you'll have public budgets impaired
Speaker 1: without the sales tax ticking time bombs on pension plans.
Speaker 1: Retail employees more people than any other industry, the layoffs
Speaker 1: and the corresponding collateral consequences will ripple through the economy,
Speaker 1: and it will be all the all the all the while,
Speaker 1: fifty four million Americans are is on Prime subscribers, all
Speaker 1: the while they're paying almost a hundred dollars a year,
Speaker 1: all the while, all the while pim and increasing at
Speaker 1: nearly a compounded growth rate in all the key areas
Speaker 1: you referenced. So uh. And of course, you can't in
Speaker 1: order to be be a successful mall operator, to be
Speaker 1: in fact, to be a very successful store in one
Speaker 1: of those malls, there has to be a lot of
Speaker 1: stores around. You can't just be Macy's and a couple
Speaker 1: of others. And you've also said that this is one
Speaker 1: of the problems that there's some some other tenants some
Speaker 1: of the retailers that are going down the tubes. And
Speaker 1: that's another thing hurting companies like Macy's. Kathleen is you're
Speaker 1: referencing Macy's problem is that neighborhood's going bad. So for example,
Speaker 1: New Milford Mall outside of Pittsburgh, Simon Property Good owner
Speaker 1: mall still filed for bankruptcy because their occupancy rate drafted
Speaker 1: by about thirty percent when two key mall owners uh
Speaker 1: uh mall retailers left. So Macy's is a co anchor,
Speaker 1: just didn't have enough customer account to keep going. And
Speaker 1: the number of inlines are closing. So it's you and
Speaker 1: pen We have reported in Syriatum uh Sports Authority, Eastern
Speaker 1: Mountain Sports Sports Shelle uh and and and so many
Speaker 1: other category dominant and anchor retailers are closing that Macy's
Speaker 1: can't carry them all by itself and is paying a
Speaker 1: tremendous price even though they're doing well. In his Charlie
Speaker 1: Pellet indicated Disney is really the leading indicator for us
Speaker 1: in terms of the health of the consumer, and if
Speaker 1: Disney can't turn the corner, they're real concerns about the
Speaker 1: consumer and the economy in general. Steve Old who used
Speaker 1: to be I believe the head of Office Depot. That's
Speaker 1: why I'm mentioning him to you. He says, he's said
Speaker 1: in the past that e commerce and smaller specialty shops
Speaker 1: we're killing department stores. Is there anything that you see
Speaker 1: that would make that statement untrue? Well, also also with
Speaker 1: the president of Gallery Lafayette UM in Europe and worldwide,
Speaker 1: department stores are dead because the shopper basis is going
Speaker 1: in different directions. But it's also a lack of antitrust enforcements,
Speaker 1: so with Amazon and sales taxes, but us also it's
Speaker 1: a brilliance of Bezos. So for example, Bezos has invested
Speaker 1: in five million distribution centers square footage just New York,
Speaker 1: New Jersey, Philadelphia. A lot of its robotic sized, so
Speaker 1: their cost to your point on Prime, they can get
Speaker 1: the merchandise faster, So Staples doesn't get affirmed by Judge
Speaker 1: Emmett's solvent that was that the merger's blocked. Was that
Speaker 1: a mistake We got about thirty seconds left. Uh, it
Speaker 1: probably was a mistake. But to pimps point, I can
Speaker 1: order a cartridge from Amazon and Prime and get it
Speaker 1: in nine hours. It takes help increase Amazon's dominance by
Speaker 1: blocking this merger and Amazons less so. Uh, they should
Speaker 1: have invoked a wild got chall should have invoked to
Speaker 1: fill company doctrine for office depo office max. Uh, there's
Speaker 1: some questions and for in my professional view on antitrust
Speaker 1: representation for another day. Thank you very much. I think
Speaker 1: the star the stores will be around a little at
Speaker 1: least a little bit longer we can have that, uh conversation.
Speaker 1: He'll be a real retail renaissance after the rationalizations starting
Speaker 1: in all right, Well, we'll hope you're all around until then.
Speaker 1: Bert Flicking Cherre, thank you very much, Managing Director, Strategic
Speaker 1: Resource Group. Shares of Macy's today down, Shares of Amazon
Speaker 1: today up one and a half percent. You're listening to
Speaker 1: taking Stock and this is Bloomberg Radio coming up. Bloomberg
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