Death of Shopping Malls and Department Stores in Five Charts


Traditional retailers are getting killed by online shopping, especially Amazon. Five charts tell the story.

Core Retail Sales

Core retail sales are retail sales excluding autos, auto parts, and gasoline.

I calculate 17.9% not 20% as shown in the above chart. But this is nitpicking.

I loved the idea in the lead chart, pulled off Twitter, and that is why I did this post.

Core Retail Sales Components

Core retail sales include dining out (something impossible to do online), as well as grocery shopping (not realistically possible to do completely online especially meat, other fresh foods, and frozen foods).

Core Retail Sales Minus Food Categories vs Nonstore Retail

Nonstore Retail Percentage of Core Sales Excluding Food

Trend Won't Stop Here

This trend will not stop here.

Auto sales will eventually be mostly online. Dealers will become service centers.

Gasoline will give way to electric.

Uber, Lyft, and rent-on-demand will eventually replace car ownership.

The entire notion of "core" retail sales will itself change as delivery mechanisms and ownership preferences change.

This will not happen overnight. But the trends are clear on multiple fronts.

For now, expect more store retail store closings and bankruptcies.

Enormously Deflationary

The picture I present is enormously deflationary.

Technology is inherently deflationary by any realistic definition.

Fighting this, as central bankers do, is extremely counterproductive.

BIS Deflation Study

The BIS did a historical study and found routine deflation was not any problem at all.

Deflation may actually boost output. Lower prices increase real incomes and wealth. And they may also make export goods more competitive,” stated the study.

It’s asset bubble deflation that is damaging. When asset bubbles burst, debt deflation results.

Central banks’ seriously misguided attempts to defeat routine consumer price deflation is what fuels the destructive asset bubbles that eventually collapse.

For a discussion of the BIS study, please see Historical Perspective on CPI Deflations: How Damaging are They?

Nothing But Bubbles

Central bankers are hell bent on producing inflation but the result is nothing but bubbles.

Guess what?

Bubbles pop.

Tough Chore

Producing inflation (as measured by central banks) is a tough chore. Negative interest rates don't help.

If producing inflation was easy, Japan would have succeeded long ago.

For discussion of the negative interest rate debacle, please see ECB's Counterproductive QE: Whatever It Takes Morphs Into "As Long As It Takes"

Of course, there is plenty of inflation. Central banks don't see it because they ignore stock market bubbles and housing prices. They also understate medical costs.

Deflation on Deck

As stated above, bubbles pop. When they do, credit deflation ensues.

Add to that mix, student debt, attitudes on marriage and home ownership, and deflationary demographics.

Mike "Mish" Shedlock

Comments (33)
No. 1-15

Decade (a record)of no growth,completely dead in the water economy will do that.Goes to show that printing hundreds of trillions out of thin air to buy (prop up)everything and pretending everything is "booming" or in "recovery" ain't getting it done,sadly pretending won't pay the bills,and it is my belief the federal govt will not survive the year without 1.....default and 2...collapse of the currency.Simply printing money to pay bills doesn't least not for long!


But so many Trump supporters keep saying the economy is great! Thanks Trump! [lol]


"Gasoline will give way to electric."

Not unless government actions force it.

Country Bob
Country Bob

Oh here we go with the deflation nonsense again.

Meanwhile, Target, Walmart and Costco are absolutely having a field day. Sales are way up. Walmart's e-commerce efforts are growing faster than Amazon's did. The fact that there is already a Walmart in every small town USA means Walmart has a HUGE (copyright Donald Trump) advantage. Target is smaller, but they are having success in home goods. Costco has a limited inventory but doing well in their chosen products.

The stores that bleed profits to pay dip sh!t shopping mall rents... they are in big trouble.

Its a real estate story, not a retail story. Mish is focused on the wrong symptoms again.


Ive talked about this before ... the online retail sales requires delivery, and I have a friend that was an Uber/Lyfter for a year and does "Doordash"-style delivery now. Everyone does realize that these businesses currently expect the car owner/UPS/FEDEX -- like my friend -- to do all car repair, maintenance, gas, loan payments, deposit on buying another car every 2-4 years (he was doing 40k miles a year!) based on a starvation wage. You are doing delivery cause youre desperate, and have no money to save for the next car purchase. These businesses dont want to have those vehicle expenses! Theres only so many sub-$20ks with working cars to press into service. Oh, thats ok, we'll use drones and company trucks instead ... you have a weight issue and trucks are expensive too (electric trucks with batteries are gonna be real heavy). Today you get an MBA taking courses on how to push your expenses onto the ever-increasing poor. This will work .. for awhile ...


I hate malls, but this is no cause for rejoicing.

The store (of some kind) will live forever, though perhaps with orders of magnitude less sq feet.


Gen Z is going back to the malls. There is not enough volume to support the current capacity but they will survive.


The experts in inflation are Zimbabwe, Venezuela and Weimar Germany.

The problem is generating ACCEPTABLE levels of inflation.

Brutus' Admirer
Brutus' Admirer

Mish, I think you are wrong about electric cars. In most ways (esp. energy efficiency, but also probably environmentally), they are inferior. 130 years of refinement of the internal combustion engine has made a damned good product.

STB Fatman
STB Fatman

How is it counted, if you shop groceries online, but then pick them up at the physical store? And what if they are delivered?

El Capitano
El Capitano

Amazon is successful because it is financing its operations to provide shipping below market rates. Same as China inc. That will end soon. Watch interest rates; they are the sworn enemy of the GDP (Global Debt Ponzi).


People, women in particular, still LOVE outdoor shopping ! Here, in our belgian towns and cities, boutiques are increasingly going bankrupt or simply disappearing, not for lack of customers but rather because of the unsustainable, crazily high rents that have to paid as a consequence of the cheap debt inflated property market.....


The new mall is Amazon Marketplace. In 20 years their warehouses will probably look like malls when the next new thing comes along, or municipalities tax warehouses to death.

In the meantime, Apple retail is still booming, much to the detriment of the experience. Apple isn't opening new stores, just doubling down on existing ones and devoting more space to selling product instead of supporting it. The last two times I was in an Apple store they were jammed full of people (as was the mall -Park Meadows in Denver), and just getting the attention of a salesperson was a 10 minute ordeal. Then came the wait in the kids' play area (don't think it was designed to be that, but there was a mob of kids playing with the furniture) and finally getting done what I came in for. Oddly enough I had scheduled an appointment. Sure, just an anecdote but just about every weekend I've been in an Apple store is pretty much the same experience either a lot of people are having problems with their iPhones or a lot of people are shopping retail.


Make that 6 graphs.

Mall REIT vs all REITs:


"The BIS did a historical study and found routine deflation was not any problem at all."

1929-33 was not routine deflation.

Deflating interest rates have lead to a credit bubble. Central Banks have even gone negative interest in an attempt to keep the bubble from bursting. Burst bubbles re anything but routine deflation.

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