According to published statistics, the United States has the highest retail space per capita of any major country in the world. (Reports cite different numbers, depending on measurement methodology, but the end result is always the same, with the U.S. in first position.) This should come as no surprise, since we Americans are big consumers. It is in our DNA to shop and buy things. Consumption accounts for close to 70% of the U.S. economy. Of course, how we shop has changed with the advent of online shopping and its hegemon, Amazon (AMZN, $145). When I shop until I drop it typically means that I am in my bed, snug under the covers, clutching my iPad and making those last clicks on Amazon before I drop--off to sleep, that is.
Two brick-and-mortar companies that seem to be thriving in this fearless new world of shopping are Costco (COST, $607) and TJX Companies (TJX, $88), owing to their respective business models. About ten years ago my wife and I took our two-year-old grandson with us to Costco, and I thought it would be cute to send a picture of us to some of my friends. One friend asked, "Do they sell toddlers at Costco now?" I replied, "Yes, but you have to buy two dozen of them." Yep, Costco is not the place to find a single small container of anything, but if you're looking to stock up on paper towels or toilet paper, this is your spot. We go to Costco about once a month and load up on lots of non-perishables, but we've actually started ordering our paper products through their Website. Costco is also where we buy our Christmas tenderloins. TJ Maxx stands out because they buy merchandise that didn't sell at other stores, which means that their inventory is constantly changing--a nice ploy to get customers into the stores. What Costco and TJX share in common is less expensive merchandise.
None of this is news to anyone who does any shopping, but the point here is to distinguish between companies that might be worthy of our investment dollars and those that are not. One of the main reasons I don't want to invest in Macy's (M, $16.70) or any other of its ilk is that they simply have too much space. And there is really no compelling need for all of that space in a time when you can find just about anything that would make your heart happy online.
Now think about the upsurge of crime we are witnessing in Memphis and you have yet another reason to sit by the fireplace in your pajamas and click away to your heart's (if not your wallet's) delight. When the Oak Court Mall opened in Memphis in 1988, it was quite the upscale place to shop. The Mall of Memphis opened in 1981 and never had the panache of Oak Court--and was dubbed the "Mall of Murder" before it closed in 2003 and demolished in 2004. Indoor malls, Oak Court being the current example, seem to have acquired the "cesspool" curse, attracting those elements of our society that are bringing mischief and mayhem to the retail experience. Some people may still insist on having the mall experience. Well, I say knock yourself out. Or wait until some mugger knocks you out in the parking garage. Now that is shopping until you drop.
Some people criticize Amazon and accuse it of being a monopoly. That is nonsense. Where are the higher prices? Where are the barriers to entry? Some people (a friend of mine calls them "The Haters") just don't like to see anyone or any business be too successful. This is the "every kid should get a trophy" mentality. A pharmaceutical company that develops and patents a unique life-saving drug is a monopoly, for a time. That is not Amazon, where my last purchase was bars of Dial soap, which I could buy anywhere. The Haters will resent Amazon for its success, but where is the harm to the consumer? I imagine the haters grinding their teeth at Amazon's success while blithely clicking away to buy their kids the latest video game.
As for the surfeit of retail space, one area likely to be spared the suffering are the smaller, boutique specialty shops. My wife owns The Pink Door, the Lily Pulitzer Signature Store here in Memphis. She has about 1,600 square feet, just enough to showcase her inventory of merchandise. For shoppers who want to touch and feel or try on the clothing, this type of brick-and-mortar store fits the bill. The people who work in these smaller shops tend to be friendlier and more helpful than their mammoth store counterparts. Guess why--it's because you are likely to encounter the owner, the one who has skin in the game. I am finding more and more people who work in stores of the big corporate chains to be ignorant about the merchandise and downright surly. They exude the sense that they really don't want to be there and really don't care.
My plan? Shop local, shop small. Otherwise I'll put on my pajamas and fill up my Amazon cart. Groucho Marx once quipped: "I once shot an elephant in my pajamas. How he got in my pajamas I'll never know." I am finding that there is a lot I can get done in my pajamas. Bernstein, an investment firm, just named Amazon as one of its top stock picks for 2024. I'll stick with it, as the move to online commerce just keeps rolling along.
Life is short. Get busy.
Jim
Disclosure/Disclaimer: My family members and/or I own shares of AMZN, COST, and TJX. Individual stocks are mentioned here for the sole purpose of illustrating investment concepts, and nothing stated here should be construed as the advice to buy or sell any security.
Copyright 2023 James Brinkley Taylor, Jr.
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