Tags: sam zell | retail | landscape

Sam Zell: Retail Landscape Looks Like a 'Falling Knife'

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By    |   Wednesday, 27 September 2017 03:18 PM

Investing guru Sam Zell isn’t too impressed with Amazon’s retail prowess, which compliments the billionaire’s dire view of the industry.

Zell described the real-estate side of the retail business to CNBC as "a falling knife."

"I'm generally a contrarian. I generally rub my hands together at the opportunity for serious dislodgement," the founder and chairman of property specialist Equity Group Investments said.

"[But] an area that's in this much disarray, with so many weak players, it's not an area where I would want to deploy capital at this time," the real-estate mogul said.

The brick-and-mortar retailing industry has been trying to recover from years of declining sales and mounting losses, Reuters explained. 

Macy‘s, J.C. Penney and others have closed hundreds of stores amid cut-throat competition that includes a growing number of online shopping sites.

The list of retailers filing for bankruptcy this year is set to eclipse the 20 bankruptcies filed during the 2008 financial crisis, according to AlixPartners, which advises distressed companies.

For his part, Zell does find some value in the physical locations of retail stores.

"The basic regional mall is becoming a mini-downtown, and becoming much more diverse. And therefore saving itself," he said. "The local corner strip center is still convenience. Everything in between is an oxymoron," said Zell, who also chairs five NYSE-listed companies, including three real estate investment trusts.

"The U.S. has four or five times the amount of square footage per person of retail as anywhere else in the world." As the industry deals with a correction, retail is going to be "less comfortable for the next few years," he added.

Meanwhile, major retailers are looking to stimulate anemic sales by hiring thousands of more workers this holiday season to improve customer service on their sales floors and handle the fast-growing use of their stores to fulfill online orders.

The move comes as several analysts note that retailers have lost sight of basic in-store customer needs as they scrambled in recent years to compete better with Amazon.com Inc. by cutting costs through store closures, offering more mark-downs and pouring millions into building out e-commerce platforms, Reuters explained.

“In the last two or three holiday seasons, retailers have been so focused on digital, that perhaps they haven’t paid enough attention to their stores,” said Carol Spieckerman, president of retail consultancy Spieckerman Retail.

As online purchases become a growing percentage of total sales, retailers want to be better prepared for the spike in online order volumes during the holidays with stronger on-the-ground support.

“I think brick-and-mortar (stores) are throwing down the gauntlet and saying, we are going to have more customer facing employees to try to hopefully take advantage of the competitive aspect that might be hard for online retailers to duplicate - that service and expertise in stores,” said Christian Magoon, chief executive officer of Amplify ETFs.

By adding more workers, retailers are also offering consumers hassle-free shopping experiences, giving customers more accessibility to pick up and return goods ordered online.

(Newsmax wires services contributed to this report).

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Investing guru Sam Zell isn’t too impressed with Amazon’s retail prowess, which compliments the billionaire’s dire view of the industry.
sam zell, retail, landscape
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2017-18-27
Wednesday, 27 September 2017 03:18 PM
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