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Retail Tipping Point

The demise of retailers is rapidly accelerating. The Wall Street Journal on Saturday reported that since the first of January, 2,880 retail locations have been shuttered amid a new wave of bankruptcies including bebe stores, Rue21, Payless Stores, RadioShack, Gander Mountain, Limited Stores, and the list goes on, and on. The retail sector was in its own version of a housing bubble, and now it’s bursting. Over the past three decades, retailers were on an expansion spree, land-grabbing locations, in some malls, more than one. All the while, the Internet was gearing up to do to apparel companies what it had done successfully to bookstores, sapping their margins and eliminating pricing power. Mall owners are beginning to realize that we are in a new normal and have begun the transition of vacant spaces into grocery stores, entertainment venues, food and beverage gathering places, and other alternative uses. The tipping point is upon the retail sector, and it is going to be a rough slog as retailers and mall owners race to adjust.

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