It appears that capital spending will continue to be reduced by a wide variety of companies, ag/mining/oil excepted. What surprises me is that consumer spending has not yet fallen off dramatically. Either people are discovering stacks of money hidden under the floorboards, or consumer credit is next on the implosion list.
My take is that consumer spending has fallen off considerably - except for food and gasoline. Consumers are in shock right now as they try to make the ordinary, daily expenses and I think the weekend trips to the mall for discretionary spending are coming to an end.
As far as the daily commute goes, there is no option but to suck it up and pay for the gas, at least in the short term. The cash is coming out of discretionary purchases. Skyrocketing fuel costs are masking the true decline in consumption - in other words, we're all consuming less even though we're still paying just as much. I think that's why consumer spending hasn't dropped off yet.
Peripheral Visionary writes:
What surprises me is that consumer spending has not yet fallen off dramatically. Either people are discovering stacks of money hidden under the floorboards, or consumer credit is next on the implosion list.
Credit cards were put to use with expectation of using the tax rebate cheques to pay off the transaction?
home depot and lowe's activity has been brisk locally (jacksonville, fl)...garage sales on the other hand, way way way up...hoping for some good deals on bigger items like an air compressor and brad/framing nailer myself...
Look at the geographic distribution:
Company's targeted returns. The store locations are as follows:
-- #2015 East Fort Wayne, Indiana
-- #2032 Marion, Indiana
-- #2310 Frankfort, Kentucky
-- #379 Opelousas, Louisiana
-- #2819 Cottage Grove, Minnesota
-- #6901 East Brunswick, New Jersey
-- #6904 Saddle Brook, New Jersey
-- #6171 Rome, New York
-- #3702 Bismarck, North Dakota
-- #3874 Findlay, Ohio
-- #3865 Lima, Ohio
-- #4552 Brattleboro, Vermont
-- #4932 Beaver Dam, Wisconsin
-- #4933 Fond du Lac, Wisconsin
-- #4913 NW Milwaukee, Wisconsin
So much for the housing bust being a sunbelt-coastal containment. I can guarantee that the stores still scheduled for construction are not going to be at the high end of store size and that these 15 are the first of many. Still the signal I am looking for is when Home Depot starts "releasing" their huge stock of empty properties that they've held on to for land appreciation and competitor lock-out reasons. No more appreciation and competitors no longer expanding expect these to come on market and further depress the CRE rental and resale markets.
Re: rich
Maybe there are better uses for that land instead of large retail cookie cutter strip malls?
Woe to Toys R Us, Best Buy, Target, Bed Bath and Beyond, Supercuts, Starbucks, Borders, Home Depot, Staples, Circuit City, etc... a plague on your Wall Street owners. Most new strip malls look the same where-ever you go... I suppose going forward they will now all look similarly deserted...
But can we get some of that land put back up for farming or production?
The recession is actually doing some needed house-cleaning.
Home Depot built too many stores. Big boxes are overbuilt period.
Sharper Image needed to go down. I had a gift cert. and couldn't even find anything I wanted on the website.
JCPenneys is a little outdated, if they cut back it's needed.
Starbucks was a trend. It wasn't going to last forever. Once it becomes routine, people are off to something new.
The recession will cause cutbacks, but some of these that are cutting back should be happening even w/o a recession, so it's not that discouraging. Like pruning, it's healthy.
Of Wis & Minn stores - they have Menard's near them (know for a fact some do - been to 'em) and Menard's under sells HD BADLY... The Cottage Grove HD is old & sucks & is getting eaten alive by a big newer larger and way cheaper Menard's.
Typically a company like HD would respond with an even LARGER store... but Menard's is so cheap taking them on in those locations would never payback so abandon the site & move on.
A little store locator action at the homedepot website will show that many of these store are duplicative/overlapping other stores. HD is infamous for saturation retailing and then closing a few but not disposing of the property. Very bad economic policy in a declining RRE/CRE environment IMO.
So much for the housing bust being a sunbelt-coastal containment.
Wrong conclusion. This is all about markets they were not able to compete in.
Rob Dawg - I used to shop at #4913, but then a Lowe's opened. This was in an already overcrowed field of home improvement stores. This store opened only a couple years ago.
Home Depot just walked into a buzzsaw in MN/WI with a regional/local player (Menard's) - guess who lost that war of attrition. John Menard didn't become the wealthiest d00d in WI by letting little cock-a-roaches who refer to drywall as "sheetrock" steal his market share.
One bright spot is that the vandalized forclosed homes will likely give a boost to Home Depot at some point. I'm predicting huge volume. On vandalism that is. D'oh!
A little store locator action at the homedepot website will show that many of these store are duplicative/overlapping other stores. HD is infamous for saturation retailing and then closing a few but not disposing of the property. Very bad economic policy in a declining RRE/CRE environment IMO.
Rob Dawg | Homepage | 05.01.08 - 10:29 am | #
Exactly - and I can't speak for the rest of the country but in the Upper Midwest HD faces fierce price competition from Menard's (a God awful family owned chain but completely unapologetic price whores - their motto "Save Big Money At Menard's" and is regionally famous for the cheesiest DIY ad campaign in the history of advertising).
So they have two problems up here - self cannibalization AND a rival chain that latches on follows them around sucking their would be traffic like a lamprey.
In Canada I expect some HD closings, especially in Quebec, where their stores a generally empty. It is really marked in the spring; You have the local competitorReno-Depot cracking at the seems with people, 12 checkout lines, and the HD across the street deathly quiet with two checkout lines.
I find that up here, people are still spending and very few job cuts other than the regular stream of outsourcing/closings of manufacturing plants.
The feeling I get from when I am doing in the states is that the news is very gloom and doom, some people are having problems with their houses, but until the job cuts happen, it is still spend like there is no tomorrow...
That said, job cuts at well paid companies are starting to come down the pipes. And when the severance pays dries up, it is cold turkey. For most people that is 6 months after a job loss.
Anyone else seeing people who have lost their jobs still spending?
Where I live, you can draw a 10 mile circle and hit 6 Home Depots and 2 Lowes, in addition to local contractor-friendly yards. And I live on the ocean, so most of that circle would be in water. They'd probably expand there if they could. I know this is a highly populated area, but come on. I went to a new one 2 Saturday's ago and it was almost empty at what should have been high time.
I think the post that alluded to building for Wall Street instead of for the consumers hit the nail on the head. This big-box game was all about the quarterly numbers and not about retail need based on consumer analytics. Why else would there be a Dunkin Donuts every 2 miles around here (the next chain to go down) and Best Buys at every mall? Literally every mall.
The numbers coming out of these type of retailer are going to be miserable for the next year to 18 months. Forward earnings are looking to be hideous.
I live in Northern NJ. Most of the country has no idea how over retailed an area can become. Routes 1&9, 22, 10, 17, 4, 9, 3, 46 all lead to NYC. Each is packed with redundant retail for at least 25 miles approaching the Hudson River.
I predicted a retail glut here after the dot-com bust. I was either way wrong or way early.
Within 10 miles of me (93010) there are 3 HDs and 2 empty HD relos as they are called (Oxnard, Thousand Oaks). What a horrible waste particularly since one of the excuses Amgen is using to justify their moving out of Thousand Oaks is the lack of available commercial expansion space. Hmm, maybe they can use those cavernous empty big boxes to store the office furniture when Countrywide closes until the Resolution Trust Corporation (Ver 2. gets running.
There's another aspect. HD is not a hardware store definitely but isn't even much of a home improvement store anymore either. Lots of square footage has gone over to "design centres" and large appliances. What's left of hardware is ruinously expensive and I don't mean copper wiring or plumbing which have an excuse but simple basic undersink hoses or irrigation pipe glue or toggle bolts. That product mix and price model is not going to work in a downturn.
I agree with rich, ". . .There are semi-permanent changes taking place." Only, I don't think they're so "semi".
Go to a Home Depot and check out the lighting aisle. Nice stuff for a do-it-yourselfer there, but zero traffic. They used to keep all of the lights turned on in the floor samples. Not anymore.
Even with the expansion of credit, flat wages will not allow expansion of the economy. The consumer was overindebted before gas and food started rising (a fine example having been set by profligate government deficit spending).
The middle class and poorer consumers (those with no healthcare, or who are on fixed income, or who have no or negative net worth - not SM investors), until now, comfortable that their lifestyles were historically and comparably justified, are just awakening to the reality of the situation they are in. Gas prices alone are eating them alive - fancy lights from Home Depot don't rank.
The middle class consumers are laboring under the false assumption that someone will do something to help them out (someone always does something, don't they?).
I wonder if the Wright Model B factors in civil unrest.
That product mix and price model is not going to work in a downturn.
It seems to me that Home Depot and Lowe's went in two different directions. HD seems to cater more to the med to large contractor, while Lowe's focuses squarely on the general consumer. I don't like HD because I want to buy 6 screws, not 500 screws. And if I need a compression fitting, I generally need one and one spare, not a box.
And Lowe's seems to be laid out better, with better help and everything is presented in a more consumer-friendly way. So my take on this is going to be that HD is going to contract far more than Lowes is, as they are more overbuilt, and skewed their model to the wrong demographic for a downturn.
Dryfly,
OT: Anybody wanting to claim the title of cheeziest ad campaigns has to go up against "Railroad Salvage" with Ruby Vine and his wife Choo-Choo.
[thus sayeth he who shopped at Spag's throughout College]
Someday, businesses in America will look back in amazement at how stupid it was to allow the middle class to be gutted. That to me is the ultimate in wall street short term thinking.
Also, I predict that soon, corporate America will be clamoring for rate increases. Nothing kills profits like inflation. Wall street short sightedness can not last.
Bartman - I assume you're from Chicago. I stopped by an Ace Hardware this weekend and it was packed. And the only reason I did so is because I'm tired of having to walk eight miles through a cavernous warehouse to find a screw. I think the Ace's of the world will fare a little better for now because their model doesn't rely as much on contractors. But it was definitely busy, and it will be a while before I go back to Menards/HD...
thus sayeth he who shopped at Spag's throughout College
Hey I shopped at Spag's throughout college too. He was a trip, and I loved the store back then. Now since Building 19 took them over, not so much. Nice nostalgia there Rob.
Angry Saver,
I think the gov't will do everything in its power to make sure the middle class isn't gutted. They might run out of ammo trying, but, don't understimate the overuse of future liabilities to "save" today.
Marcus Aurelius writes:
The middle class consumers are laboring under the false assumption that someone will do something to help them out (someone always does something, don't they?).
I wonder if the Wright Model B factors in civil unrest.
We are wandering ever further afield but...
The problem is a lack of historical perspective. The "middle class" is a very recent development and there's nothing to indicate it is an enduring phenomena. 1947 to 1973 is not very long for a fundamental change in society. The very fact that people are beginning to see "working class, mercantile class and elites" again with the corresponding class impenetrability says or brief dalliance with class mobility may have been a failed experiment.
ellie - you mean you don't dig the "Tool Shop" brand?
The thing that I'm not sure most consumers "get" is that, aside from their house brands & loss-leader Sunday paper ad items, their prices are not any better than a hardware store - one where the employees actually know shit.
I did the following price check last week: Tecumseh mower replacement air filter:
I like your sentiments, but I just don't see the government being able to help. Government help = inflation & higher taxes. Inflation & taxes are at the root of the problem. If globalization means lower or stagnant wages, then we need a policy of ZERO CPI inflation.
That Menard's story was sickening. There are sadistic tendencies there. Thank goodness there are some worker's protection legislation on the books, though it is clear they are not being enforced.
I do not live near a Menard's, but I have relatives who do. I am planning to send this article to them and to urge them to shop somewhere else. People like John Menard are destructive.
Rob - Capitalism does not tend to creatre a middle class by itself. It tends to create very rich and very poor. Government and union forces in creating the middle class were really the primary forces: 40 hour woork week, paid vacations, living wage, social security.
The cause of the decline of the US middle class today is mostly free trade with very low wage countries plus 12-30 million illegals creating pressure on wages. The US built it's huge manufacturing base during a time of high tariffs, same as the UK. Once they reached the peak and had saturated their own markets, they became free traders and their economies began to decline.
The net flow of wealth out of the US is astonishing and far outweighs any free trade benefits - once the all the wealth has been sucked out, the US is hoping for fair/free access to foreign markets... but that remains to be seen. It is likely a pipe dream.
I grew up in Lima, Ohio, right after WW II. Lots of heavy industry then and good paying union jobs. Findlay is not far away and similar, plus they had Marathon Oil. Findlay HD is also closing (Ft Wayne also) so next nearest is Piqua -- at LEAST an hour's drive. No overlap there.
Now the town is sad. My wife and I are going back for our 50th year HS reunion this fall as we have done for many years. Except for our friends and a few cousins there's really not much in Lima any more. The best movie theater in town -- where my mother in law played the organ between features -- is now a rock/disco bar with wet T-shirt contests.
When my dad died in 1995, we sold his 4 Bd Rm 2 1/2 bath house with 2 car attached garage and finished basement in the "good" part of town for $80K. I almost wept, but was glad to get it. I doubt it's worth that much now -- perhaps with inflation...?
The New Jersey Home Depot store closings are in affluent and/or vital/growing areas. Lowe's and hardware store revival are factors causing HD to capitulate where you would otherwise think they should reap the most cash ring of all their stores. Five years ago, the hardware stores were starring death in the eyes because of HD and Lowe's. Today I truly prefer my local Ace hardware. Maybe it's different for contractors.
It sits on the site of a former K-mart store that was shuttered shortly after K-mart filed bankrutcy in 2003.
I remember getting some awesome deals in their liquidation sale.
After sitting vacant for over a year, in 2004 Home Depot came along and announced that they would, as the city Alderman put it: "turn an ugly duckling into a beautiful swan".
So, after HD spent $9.5 million to build a brand new store in 2005, they are closing it today. Liquidation sale starts tomorrow.
I expect to find some awesome deals.
Moral of the story? 7401 W Good Hope Rd. Milwaukee, WI is a cursed site for big-boxes.
Please don't feed the trolls.
That's a capital idea!
It appears that capital spending will continue to be reduced by a wide variety of companies, ag/mining/oil excepted. What surprises me is that consumer spending has not yet fallen off dramatically. Either people are discovering stacks of money hidden under the floorboards, or consumer credit is next on the implosion list.
Another nail in the CRE coffin?
With all the debate here about the cycle, recession, etc., I keep believing we are dealing with more than an economic cycle.
There are semi-permanent changes taking place.
Over the past decade or more, the retail chain concept has taken off (with the help of Wall Street).
Retail went from being a value sector to a growth sector, and massive new store opening plans were needed to keep the growth mantra and high P/Es.
The over-building was never about meeting local market consumer demand. It was all about meeting Wall Street demand.
That trend is over for a long time. Retail is not growth. For some time, it may not even be value.
The drag on earnings from store closings will be felt for a long time.
The drag also will affect non-residential construction and employment for a long time.
Not suprising. Home Depot's are everywhere and they have to know that their business will slump as the housing market slumps.
The Home Depot in our town has been a morgue. Does anyone know what 15 stores they are planning on closing?
Thanks
Just got a great deal on a W/D @ HomeDepot. It will be nice to have clean clothes while I staying home and eating my ALPO.
My take is that consumer spending has fallen off considerably - except for food and gasoline. Consumers are in shock right now as they try to make the ordinary, daily expenses and I think the weekend trips to the mall for discretionary spending are coming to an end.
As far as the daily commute goes, there is no option but to suck it up and pay for the gas, at least in the short term. The cash is coming out of discretionary purchases. Skyrocketing fuel costs are masking the true decline in consumption - in other words, we're all consuming less even though we're still paying just as much. I think that's why consumer spending hasn't dropped off yet.
Marketwatch says ISM is 48.6 versus 48.0 expected. Recession that never happened is so over. Stocks to the moon! Sebastian for president!
Peripheral Visionary writes:
What surprises me is that consumer spending has not yet fallen off dramatically. Either people are discovering stacks of money hidden under the floorboards, or consumer credit is next on the implosion list.
Credit cards were put to use with expectation of using the tax rebate cheques to pay off the transaction?
Oops, I found the list of stores closing. Sorry, I should have read the link first.
home depot and lowe's activity has been brisk locally (jacksonville, fl)...garage sales on the other hand, way way way up...hoping for some good deals on bigger items like an air compressor and brad/framing nailer myself...
they are late to rebranding.
How could they still have Home in the title.
ssince lowes is taken, maybe they can choose Less Depot
Look at the geographic distribution:
Company's targeted returns. The store locations are as follows:
-- #2015 East Fort Wayne, Indiana
-- #2032 Marion, Indiana
-- #2310 Frankfort, Kentucky
-- #379 Opelousas, Louisiana
-- #2819 Cottage Grove, Minnesota
-- #6901 East Brunswick, New Jersey
-- #6904 Saddle Brook, New Jersey
-- #6171 Rome, New York
-- #3702 Bismarck, North Dakota
-- #3874 Findlay, Ohio
-- #3865 Lima, Ohio
-- #4552 Brattleboro, Vermont
-- #4932 Beaver Dam, Wisconsin
-- #4933 Fond du Lac, Wisconsin
-- #4913 NW Milwaukee, Wisconsin
So much for the housing bust being a sunbelt-coastal containment. I can guarantee that the stores still scheduled for construction are not going to be at the high end of store size and that these 15 are the first of many. Still the signal I am looking for is when Home Depot starts "releasing" their huge stock of empty properties that they've held on to for land appreciation and competitor lock-out reasons. No more appreciation and competitors no longer expanding expect these to come on market and further depress the CRE rental and resale markets.
Re: rich
Maybe there are better uses for that land instead of large retail cookie cutter strip malls?
Woe to Toys R Us, Best Buy, Target, Bed Bath and Beyond, Supercuts, Starbucks, Borders, Home Depot, Staples, Circuit City, etc... a plague on your Wall Street owners. Most new strip malls look the same where-ever you go... I suppose going forward they will now all look similarly deserted...
But can we get some of that land put back up for farming or production?
We need a Tanta post on Greasy's new $50 Billion boondoggle!
So much for the housing bust being a sunbelt-coastal containment.
Odd that, other than one store in LA, none are in the sunbelt.
The recession is actually doing some needed house-cleaning.
Home Depot built too many stores. Big boxes are overbuilt period.
Sharper Image needed to go down. I had a gift cert. and couldn't even find anything I wanted on the website.
JCPenneys is a little outdated, if they cut back it's needed.
Starbucks was a trend. It wasn't going to last forever. Once it becomes routine, people are off to something new.
The recession will cause cutbacks, but some of these that are cutting back should be happening even w/o a recession, so it's not that discouraging. Like pruning, it's healthy.
Closing East Brunswick, NJ????
Wow, every time I have been in that store it is busy. My mom is gonna be pissed!
Regarding Hopeless Depot, couldn't happen to a nicer company. Turned into a real POS under Nardelli. Likely it might be the next Builders Square.
Of Wis & Minn stores - they have Menard's near them (know for a fact some do - been to 'em) and Menard's under sells HD BADLY... The Cottage Grove HD is old & sucks & is getting eaten alive by a big newer larger and way cheaper Menard's.
Typically a company like HD would respond with an even LARGER store... but Menard's is so cheap taking them on in those locations would never payback so abandon the site & move on.
Rich,
Are you gonna write s newsletter one
day? I would subscribe regardless of the cost.
A little store locator action at the homedepot website will show that many of these store are duplicative/overlapping other stores. HD is infamous for saturation retailing and then closing a few but not disposing of the property. Very bad economic policy in a declining RRE/CRE environment IMO.
Menard's under sells HD BADLY...
Someone undersells Home Cheapo? Whoa. I'll have to look up that website.
So much for the housing bust being a sunbelt-coastal containment.
Wrong conclusion. This is all about markets they were not able to compete in.
Rob Dawg - I used to shop at #4913, but then a Lowe's opened. This was in an already overcrowed field of home improvement stores. This store opened only a couple years ago.
Home Depot just walked into a buzzsaw in MN/WI with a regional/local player (Menard's) - guess who lost that war of attrition. John Menard didn't become the wealthiest d00d in WI by letting little cock-a-roaches who refer to drywall as "sheetrock" steal his market share.
One bright spot is that the vandalized forclosed homes will likely give a boost to Home Depot at some point. I'm predicting huge volume. On vandalism that is. D'oh!
A little store locator action at the homedepot website will show that many of these store are duplicative/overlapping other stores. HD is infamous for saturation retailing and then closing a few but not disposing of the property. Very bad economic policy in a declining RRE/CRE environment IMO.
Rob Dawg | Homepage | 05.01.08 - 10:29 am | #
Exactly - and I can't speak for the rest of the country but in the Upper Midwest HD faces fierce price competition from Menard's (a God awful family owned chain but completely unapologetic price whores - their motto "Save Big Money At Menard's" and is regionally famous for the cheesiest DIY ad campaign in the history of advertising).
So they have two problems up here - self cannibalization AND a rival chain that latches on follows them around sucking their would be traffic like a lamprey.
In Canada I expect some HD closings, especially in Quebec, where their stores a generally empty. It is really marked in the spring; You have the local competitorReno-Depot cracking at the seems with people, 12 checkout lines, and the HD across the street deathly quiet with two checkout lines.
I find that up here, people are still spending and very few job cuts other than the regular stream of outsourcing/closings of manufacturing plants.
The feeling I get from when I am doing in the states is that the news is very gloom and doom, some people are having problems with their houses, but until the job cuts happen, it is still spend like there is no tomorrow...
That said, job cuts at well paid companies are starting to come down the pipes. And when the severance pays dries up, it is cold turkey. For most people that is 6 months after a job loss.
Anyone else seeing people who have lost their jobs still spending?
I am doing more DIY with this economy but am going to the local hardware store first if I can. They have something HD doesn't, it's called SERVICE.
Someone undersells Home Cheapo? Whoa. I'll have to look up that website.
Good luck with that... last I checked their website looked like a scanned version of the print flyer that goes out in the local 'Penny Saver'.
You don't undersell HD by hiring a bunch of West Coast web site developers... unless they care to do double duty in the lumber yard.
Where I live, you can draw a 10 mile circle and hit 6 Home Depots and 2 Lowes, in addition to local contractor-friendly yards. And I live on the ocean, so most of that circle would be in water. They'd probably expand there if they could. I know this is a highly populated area, but come on. I went to a new one 2 Saturday's ago and it was almost empty at what should have been high time.
I think the post that alluded to building for Wall Street instead of for the consumers hit the nail on the head. This big-box game was all about the quarterly numbers and not about retail need based on consumer analytics. Why else would there be a Dunkin Donuts every 2 miles around here (the next chain to go down) and Best Buys at every mall? Literally every mall.
The numbers coming out of these type of retailer are going to be miserable for the next year to 18 months. Forward earnings are looking to be hideous.
dryfly - you might get a kick out of this article on John Menard, he's quite the character.
vendors described Menard as tenacious, frightening, entrepreneurial and paranoid all in the same breath.
Somebody likes their advertising, their spokesman is a cult phenomenon, don'tcha know: www.menardsguy.com
I live in Northern NJ. Most of the country has no idea how over retailed an area can become. Routes 1&9, 22, 10, 17, 4, 9, 3, 46 all lead to NYC. Each is packed with redundant retail for at least 25 miles approaching the Hudson River.
I predicted a retail glut here after the dot-com bust. I was either way wrong or way early.
rich - Great insight as always.
I just hate Menards. Hate 'em. I must be an elite, because I'll pay more for better quality stuff. Silly me.
Within 10 miles of me (93010) there are 3 HDs and 2 empty HD relos as they are called (Oxnard, Thousand Oaks). What a horrible waste particularly since one of the excuses Amgen is using to justify their moving out of Thousand Oaks is the lack of available commercial expansion space. Hmm, maybe they can use those cavernous empty big boxes to store the office furniture when Countrywide closes until the Resolution Trust Corporation (Ver 2.
gets running.
There's another aspect. HD is not a hardware store definitely but isn't even much of a home improvement store anymore either. Lots of square footage has gone over to "design centres" and large appliances. What's left of hardware is ruinously expensive and I don't mean copper wiring or plumbing which have an excuse but simple basic undersink hoses or irrigation pipe glue or toggle bolts. That product mix and price model is not going to work in a downturn.
I agree with rich, ". . .There are semi-permanent changes taking place." Only, I don't think they're so "semi".
Go to a Home Depot and check out the lighting aisle. Nice stuff for a do-it-yourselfer there, but zero traffic. They used to keep all of the lights turned on in the floor samples. Not anymore.
Even with the expansion of credit, flat wages will not allow expansion of the economy. The consumer was overindebted before gas and food started rising (a fine example having been set by profligate government deficit spending).
The middle class and poorer consumers (those with no healthcare, or who are on fixed income, or who have no or negative net worth - not SM investors), until now, comfortable that their lifestyles were historically and comparably justified, are just awakening to the reality of the situation they are in. Gas prices alone are eating them alive - fancy lights from Home Depot don't rank.
The middle class consumers are laboring under the false assumption that someone will do something to help them out (someone always does something, don't they?).
I wonder if the Wright Model B factors in civil unrest.
That product mix and price model is not going to work in a downturn.
It seems to me that Home Depot and Lowe's went in two different directions. HD seems to cater more to the med to large contractor, while Lowe's focuses squarely on the general consumer. I don't like HD because I want to buy 6 screws, not 500 screws. And if I need a compression fitting, I generally need one and one spare, not a box.
And Lowe's seems to be laid out better, with better help and everything is presented in a more consumer-friendly way. So my take on this is going to be that HD is going to contract far more than Lowes is, as they are more overbuilt, and skewed their model to the wrong demographic for a downturn.
Dryfly,
OT: Anybody wanting to claim the title of cheeziest ad campaigns has to go up against "Railroad Salvage" with Ruby Vine and his wife Choo-Choo.
[thus sayeth he who shopped at Spag's throughout College]
Dryfly - re Menard's ads:
What ever happened to the Harry Caray look-a-like?
Marcus Aurelius,
Someday, businesses in America will look back in amazement at how stupid it was to allow the middle class to be gutted. That to me is the ultimate in wall street short term thinking.
Also, I predict that soon, corporate America will be clamoring for rate increases. Nothing kills profits like inflation. Wall street short sightedness can not last.
Bartman - I assume you're from Chicago. I stopped by an Ace Hardware this weekend and it was packed. And the only reason I did so is because I'm tired of having to walk eight miles through a cavernous warehouse to find a screw. I think the Ace's of the world will fare a little better for now because their model doesn't rely as much on contractors. But it was definitely busy, and it will be a while before I go back to Menards/HD...
From Yahoo Finance link to AP story:
Consumer spending up but much of gain reflects higher prices
The consumer is being forced to spend more. Every last drop of wealth will be drained, and only a husk will remain.
The Baatan death march of the middle class consumer.
Market's up!
thus sayeth he who shopped at Spag's throughout College
Hey I shopped at Spag's throughout college too. He was a trip, and I loved the store back then. Now since Building 19 took them over, not so much. Nice nostalgia there Rob.
Angry Saver | 05.01.08 - 11:06 am
Agreed.
Angry Saver,
I think the gov't will do everything in its power to make sure the middle class isn't gutted. They might run out of ammo trying, but, don't understimate the overuse of future liabilities to "save" today.
Marcus Aurelius writes:
The middle class consumers are laboring under the false assumption that someone will do something to help them out (someone always does something, don't they?).
I wonder if the Wright Model B factors in civil unrest.
We are wandering ever further afield but...
The problem is a lack of historical perspective. The "middle class" is a very recent development and there's nothing to indicate it is an enduring phenomena. 1947 to 1973 is not very long for a fundamental change in society. The very fact that people are beginning to see "working class, mercantile class and elites" again with the corresponding class impenetrability says or brief dalliance with class mobility may have been a failed experiment.
ellie - you mean you don't dig the "Tool Shop" brand?
The thing that I'm not sure most consumers "get" is that, aside from their house brands & loss-leader Sunday paper ad items, their prices are not any better than a hardware store - one where the employees actually know shit.
I did the following price check last week: Tecumseh mower replacement air filter:
$5.49 TrueValue, OEM part.
$6.99 Menards, off-brand.
Amazon has them for $4.99
Bartman - see my previous post for the 'Harey Carey' look-alike.
Elvis,
I like your sentiments, but I just don't see the government being able to help. Government help = inflation & higher taxes. Inflation & taxes are at the root of the problem. If globalization means lower or stagnant wages, then we need a policy of ZERO CPI inflation.
That Menard's story was sickening. There are sadistic tendencies there. Thank goodness there are some worker's protection legislation on the books, though it is clear they are not being enforced.
I do not live near a Menard's, but I have relatives who do. I am planning to send this article to them and to urge them to shop somewhere else. People like John Menard are destructive.
Rob Dawg,
A voting middle class is a relatively new phenomena too. One begets the other.
Angry Saver,
National politics foregoes rationality and common sense in exchange for the vote. That is a problem that only makes problems worse.
ipodius:
Obviously I misjudged your location the other day. The nearest HD is an hour's drive from where I live. Lowe's, who knows?
Conwell Lumber, Land's End Marine Supply...now we're getting somewhere.
Rob - Capitalism does not tend to creatre a middle class by itself. It tends to create very rich and very poor. Government and union forces in creating the middle class were really the primary forces: 40 hour woork week, paid vacations, living wage, social security.
The cause of the decline of the US middle class today is mostly free trade with very low wage countries plus 12-30 million illegals creating pressure on wages. The US built it's huge manufacturing base during a time of high tariffs, same as the UK. Once they reached the peak and had saturated their own markets, they became free traders and their economies began to decline.
The net flow of wealth out of the US is astonishing and far outweighs any free trade benefits - once the all the wealth has been sucked out, the US is hoping for fair/free access to foreign markets... but that remains to be seen. It is likely a pipe dream.
You want to know about the rust belt?
I grew up in Lima, Ohio, right after WW II. Lots of heavy industry then and good paying union jobs. Findlay is not far away and similar, plus they had Marathon Oil. Findlay HD is also closing (Ft Wayne also) so next nearest is Piqua -- at LEAST an hour's drive. No overlap there.
Now the town is sad. My wife and I are going back for our 50th year HS reunion this fall as we have done for many years. Except for our friends and a few cousins there's really not much in Lima any more. The best movie theater in town -- where my mother in law played the organ between features -- is now a rock/disco bar with wet T-shirt contests.
When my dad died in 1995, we sold his 4 Bd Rm 2 1/2 bath house with 2 car attached garage and finished basement in the "good" part of town for $80K. I almost wept, but was glad to get it. I doubt it's worth that much now -- perhaps with inflation...?
And so it goes.
Sorry, the above anonymous is I.
The New Jersey Home Depot store closings are in affluent and/or vital/growing areas. Lowe's and hardware store revival are factors causing HD to capitulate where you would otherwise think they should reap the most cash ring of all their stores. Five years ago, the hardware stores were starring death in the eyes because of HD and Lowe's. Today I truly prefer my local Ace hardware. Maybe it's different for contractors.
"The Baatan death march of the middle class consumer."
You guys are too much. I hate to the whining when things get really tough.
This is GREAT News.
Maybe the wetback illegal alien felon invaders will head South where they came from and belong.
Viva America!
One more comment on store#4913.
It sits on the site of a former K-mart store that was shuttered shortly after K-mart filed bankrutcy in 2003.
I remember getting some awesome deals in their liquidation sale.
After sitting vacant for over a year, in 2004 Home Depot came along and announced that they would, as the city Alderman put it: "turn an ugly duckling into a beautiful swan".
So, after HD spent $9.5 million to build a brand new store in 2005, they are closing it today. Liquidation sale starts tomorrow.
I expect to find some awesome deals.
Moral of the story? 7401 W Good Hope Rd. Milwaukee, WI is a cursed site for big-boxes.