Macy’s Is Closing 100 Stores. Where Did All of Its Customers Go?
Macy’s announced Thursday morning that 100 of its stores, representing almost 15 percent of its locations, will ring up their final sale sometime over the next year, as the famed department-store chain continues to struggle in the fast-changing retail environment. When completed, this will leave Macy’s with 628 stores across the United States.
It seems likely that even profitable locations will be on the store closing chopping block. Sad to say, in the retail environment of 2016, even Macy’s officials admit the land underneath many of their stores is more valuable than the revenues from the actual stores themselves.
Is anyone really surprised? Chances are that you’re part of Macy’s problem. I certainly am. Do you remember the last time you visited a department store? I don’t.
In today’s retail arena, Macy’s is getting socked by a one-two punch—or maybe a one-two-three punch. There are so many things going wrong.
First, as the middle class contracts, Macy’s suffers. Many former Macys shoppers are trading down, purchasing an increasing percentage of their wardrobes from up-to-the-moment inexpensive options like H&M and Zara.
At the same time, some of those former middle class folks are now upper-middle-class folks. And the Macy’s empire isn’t perceived as being quite as upscale as, say, Saks. And even there, the luxury end of the department-store trade is experiencing problems of its own as the strong dollar discourages shoppers from abroad. Last month, the New York Post reported that same-store sales at privately held Barney’s fell 10 percent in the first quarter of 2016 over the equivalent period in 2015.
Second, many of us are buying different stuff than we did in the past. Those behavioral-finance folks who proselytize that spending on things we do like dining and travel makes us happier than buying a blender or yet another pair of jeans—well, many of us are listening. A 2014 poll found almost 4 out of 5 millennials said they would rather spend their money on experiences than things.
All this is compounded by consumers’ increasing use of online shopping options. According to UPS, which conducts an annual survey on internet shopping, this year marked the first time a majority of all purchases made by people who use the internet to shop were made online, not in traditional stores. In fact, those surveyed claimed that of everything they bought, only 1 out of 5 came from what could be described as traditional shopping—as in going to a store and buying the item without even checking online options.
As a result, even as the overall employment situation in the United States is improving, the retail sector of the economy is shedding a substantial number of jobs. Companies ranging from Walmart to Ralph Lauren have announced store closings this year. Others are completely going away—Sports Authority filed for bankruptcy, and the entire chain is in the process of shutting down. According to consultancy Challenger, Gray & Christmas, retailers have announced they are cutting almost 44,000 positions since the beginning of the year. That figure does not account for what is likely to be a substantial number of job cuts at Macy’s.
It isn’t entirely bad news for Macy’s. Sales fell less than retail analysts expected this past quarter. Moreover, it seems Wall Street likes the plan to cut the number of outlets, likely because they foresee profits from real estate sales. As a result, shares are up by more than 15 percent as I type.
So far no word from Donald Trump. After Macy’s discontinued carrying his clothing line following his comments about Mexican immigrants last year, he took to Twitter more than once to celebrate the company’s bad news.
His supporters, however, are not remaining silent. Sigh.
When Public Housing Is Bulldozed, Families Are Supposed to Eventually Come Back. Why Don’t They?
Since the mid-1990s, the United States government has spent billions of dollars tearing down public housing projects—replacing many of these communities with mixed-income housing on the premise that when the poor and the middle class live together, it’s better forever.
Dissipating the concentrated poverty of aging housing projects may sound like a fine idea, but the new developments—often built on prime urban real estate—rarely end up housing significant numbers of the original residents who must be displaced to make way for new construction. Communities are broken up and never again reassembled.
If there is a slight exception to that rule, it’s in Atlanta. There, on the site of the East Lake Meadows housing project, officials were able to bring back 25 percent of former residents to live in the new development, as my colleagues and I recount in this week’s episode of Slate’s Placemakers podcast. That percentage sounds low—except that the nationwide average hovers below 19 percent.
In cities like San Francisco, Philadelphia, Tampa, and elsewhere, housing authorities have told residents of public housing complexes that their ugly, sometimes barely habitable homes would be rebuilt as part of newly beautiful communities. The neighborhoods would be safe, with better schools, jobs, and nice, middle-class neighbors. In the interim, cities started handing out Section 8 vouchers and relocating residents. The tenants sometimes sued to stop demolition, but the bulldozers always won. And while some of those residents do return to those newly polished communities, most stay away for good.
So why don’t most people come back to the neighborhoods they’ve lived in, sometimes their entire lives?
In the new documentary 70 Acres in Chicago, the whole process looks like a targeted hit.
When the city of Chicago decided to tear down and replace the Cabrini-Green housing project beginning in the 1990s, residents heard one promise after another from the city as the demolition began. The biggest promise of all: “Every family that wants to stay in this community will stay in this community,” said Chicago Mayor Richard M. Daley in 1997. Today, almost none of the tens of thousands of people who lived in Cabrini-Green now occupy the new townhomes and apartments that sit on the land.
Chicago filmmaker Ronit Bezalel spent 20 years filming the demolition for her documentary. The last of the high rises came down in 2011. And Chicagoans are still uneasy about what happened there. "People are crying at the screenings," Bezalel told me. Former residents of Cabrini-Green are especially moved to see their old neighborhood return to life on screen. Bezalel’s film is now making the rounds in the film festival circuit, on public television, and at smaller screenings in Chicago.
Among the people she follows in the film is Mark Pratt. He grew up in Cabrini, but he and his wife couldn’t come back to the new mixed-income community, because there weren’t enough apartments for large families. Pratt and his wife took a Section 8 voucher and moved down to another neighborhood, in Chicago’s South Side. “We were all under the impression that we were moving to better neighborhoods,” Pratt said.
But his new neighborhood is just as poor and violent as the one he left. “Even though there was a lot of violence in Cabrini, I did feel a lot safer there,” he said. Networks of friends and relatives in Cabrini kept many of the poor residents afloat. These networks were a casualty of Cabrini’s destruction, when people were dispersed across the city. This disruption of the support networks for poor families is still haunting Chicago today.
Despite the promises that everyone could come back, the numbers don’t add up. The decrepit, infamous Cabrini-Green had 3,600 public housing units. When the rebuilding is complete in 2019, there will be around 2,830 units. Only 30 percent are for families in public housing. Got that? Fewer than 900 units.
The screening process is the next barrier. People are kept out of the new neighborhood if a family member has a single arrest record—even if no charges were pressed. Public housing residents have to submit to mandatory drug testing every year. They can have no record of rent and utility delinquency. They cannot take in friends and relatives. New rules in the neighborhood include no smoking, no barbecuing, no loud music, no washing cars on the street
“You actually have to be a nun,” said Deidre Brewster, one of the few original residents of Cabrini-Green who passed all the requirements and got an apartment in her old neighborhood.
In the film, she sits in a modern kitchen with large windows and beige walls, a stark difference from the old Cabrini apartments.
But coming back to Cabrini was a huge disruption to her family. Her 17-year-old daughter had a misdemeanor for fighting at school. Brewster had to send her daughter to live with relatives in order to keep her lease.
Another reason most people from Cabrini haven’t come back: finances. Moving is expensive and disruptive, and poor families can’t easily absorb these hits twice when they move away from bulldozers.
More cities are in the process of tearing down the projects. Los Angeles will redevelop Jordan Downs in the next decade, the setting of Menace II Society and the Watts race riots. The federal government will foot some of the bill, and every resident is guaranteed a spot in the new community.
This was the case in Atlanta, too, and still only 1 in 4 original residents came back. The rebuilding was quick, the housing project was relatively small, and the tenants were organized and active.
So if that’s the high water mark, the folks in Jordan Downs might want to start calling landlords now. It can take a while to find someone to accept a Section 8 voucher.
Could Trump Anxiety Drive Down Housing Prices?
Every four years, as reliably as the dawn on February 29, comes the gust of American liberals promising to head for Canada after the presidential election. Lena Dunham, for example, is going to Vancouver if Trump wins. (“Now I have to get elected,” Trump quipped.)
Who, during a presidential election between the two least popular candidates in history (one of whom is Donald Trump), would want to buy a house in this country?
In the large, homebuyers may not care. The mean sales price of existing homes, according to the St. Louis Fed, rose almost 20 percent between January and July. And yet, there are rumblings of a cooling market in some of the coastal cities—Los Angeles, San Francisco, New York—that you’d expect would most dread a President Trump.
Could the pending presidential election be to blame?
Neither candidate has plans that would meaningfully impact the average American’s home-buying plans. (Trump did briefly propose abolishing the Department of Housing and Urban Development, but who even keeps track of these things anymore?) A Zillow survey of housing experts this spring suggested that Trump would have a negative effect on the housing market; other surveys report that most Americans wouldn’t change their plans in response to the election. The homeownership consensus is about all that’s left of bipartisan politics.
Until the election, though, a period of uncertainty might render Americans wary to make the largest purchase of their lives.
Donald Trump’s Attempt at a Serious Child Care Plan Would Be Totally Useless to the Families That Need It
At last month’s Republican National Convention, would-be first daughter Ivanka Trump claimed that if elected, her father would ensure that all American parents would get access to “quality” and “affordable” child care.
During a speech on economic policy on Monday, Donald Trump, in the middle of a turnaround push involving actually endorsing Republican leaders and making ostensibly grown-up policy proposals, attempted to deliver. The plan: Trump said he will allow moms and dads to deduct the average cost of child care in the United States on their annual taxes.
Economists quickly pointed out how useless Trump’s plan would be for all too many parents.
By implementing his proposed childcare subsidy as a tax deduction rather than a tax credit, Trump effectively excludes all poor families.— Justin Wolfers (@JustinWolfers) August 8, 2016
According to Care.com, a little more than half of families are spending at least 10 percent of their annual income on child care. It’s an enormous burden. The cost is surging well in excess of the rate of inflation. The Bureau of Labor Statistics reports that the cost of child care and nursery school increased by more than 160 percent since 1990, while consumer prices during the same period went up at less than half that rate. In a majority of states, child care will cost a parent more than tuition at an in-state college.
However, there’s an enormous range of average costs, depending on where a family lives. According to the Economic Policy Institute, the monthly expense of child care for one child of preschool age can range from $344 in rural South Carolina to $1,472 a month—that’s more than $17,000 a year—in Washington, D.C.
The IRS currently offers parents a credit of $3,000 for one child aged 12 or under or $6,000 for two or more. The actual dollar amount of the tax break filers receive is determined by their adjusted gross income. This is nowhere near enough.
Deductions, like the one Trump is proposing, work on a percentage basis. The higher the tax bracket, (in other words, the wealthier the filer) the more the deduction is worth. I’ll let economist Michael Linden show you how it works:
4. For example, a family in the top tax bracket would get a $400 subsidy for every $1,000 paid in child care costs.— Michael Linden (@MichaelSLinden) August 8, 2016
5. Whereas a middle class family in the 15% bracket would get only $150 in savings for the same $1,000 in child care costs.— Michael Linden (@MichaelSLinden) August 8, 2016
And if a household is earning so little they already don’t have a tax bill? Well, yet another deduction isn’t going to do much of anything for them.
Finally, a tax deduction is unlikely to help the people who need it to pay the bills now. Taxes, after all, are filed once a year. Child care expenses, on the other hand, are paid on a regular basis. In fact, more than a few providers insist on payment in advance. .
One last thing: I should mention that while Hillary Clinton is proposing a plan that would limit a family’s out-of-pocket child care costs to 10 percent of their income, there are few specifics about how it would work. But unlike Trump’s plan, it would almost certainly help the people who need the aid the most.
A Boy Died on This Water Slide—in One of the Many States That Barely Ensure That Rides Are Safe
Earlier this month, USA Today placed the Verruckt water side at Schlitterbahn Water Park in Kansas City, Kansas, on the top of its list of the “13 Best Outdoor Water Park Rides” in America. “Insanity,” the newspaper proclaimed of the attraction, which is the world’s largest water slide, dropping riders by 17 floors in a few terrifying seconds.
On Sunday, a few days after that article appeared, Caleb Schwab, the 10-year-old son of a Kansas state legislator, died on that ride. The circumstances of his death are still murky, though one Kansas City television station is reporting that parkgoers claim the ride’s harness wasn’t working properly. One thing, however, is almost certain: the dismal state of amusement park regulations in the United States, which allow attractions in Kansas and many other states to effectively evade any serious government safety oversight.
Even as amusement rides are getting more terrifying and death-defying by the year, the amusement park industry actively fights attempts at increased regulation. According to the International Association of Amusement Parks and Attractions, surveys reveal that 4 out of 5 of its member organizations say they view “state regulation as the biggest threat to their businesses.”
As Daniel Engber wrote in Slate in 2005, regulation of the industry has historically been lax. This changed in 1973, when the newly established Consumer Product Safety Commission assumed authority over the nation’s amusement parks. Amusement park owners chafed against federal oversight. In 1981, Congress passed legislation rescinding the CPSC’s authority over “permanent” rides, only allowing them to monitor temporary rides of the sort featured at pop-up carnivals and fairs.
This is known in the trade as the “roller-coaster loophole.” It leaves the amusement park industry, for the most part, only beholden to a less-than-adequate mishmosh of state laws. According to the New York Daily News, about half the states “require regular inspections from a government agency and allow the state governments to investigate accidents” at amusement parks.
Kansas, it will surprise no one to find out, isn’t exactly tough on theme parks. In an interview with USA Today in 2014, in fact, the Verruckt’s designer specifically cited the state’s lack of regulation regarding the height of rides as one reason the amusement park operator decided to place the world’s tallest water slide there. As for inspections, the state only requires an annual exam, one that is conducted privately and that the park doesn’t need to share with state authorities. There are no surprise spot checks, like there are in neighboring Missouri.
Again, this is certainly not a problem unique to Kansas. Six states have no amusement park regulations on the books at all. Moreover, the New York Daily News pointed out that Florida doesn’t require its most popular amusement parks—Disney World, Universal Studios, and Busch Gardens—to submit to accident investigations.
One result? We have no idea how many Americans are injured annually at the nation’s amusement parks. Unless there is a horrifying accident like what happened in Kansas City on Sunday, we’re highly unlikely to hear about it.
In 2013, the journal Clinical Pediatrics published a paper analyzing emergency room admissions and concluded that between 1990 and 2010, an average of 4,423 children under the age of 17 in the United States are injured annually on amusement park rides, but that only 1.5 percent were hurt badly enough to be admitted to hospitals. The No. 1 cause of injuries? Falls from rides, responsible for almost one-third of the emergency room visits. Of course, this is likely only a small fraction of the injuries.
Don’t bother to look to the industry for stats. The International Association of Amusement Parks and Attractions, the industry’s lobbying group, relies on self-reports for its accident statistics for an annual safety and injury survey of American amusement parks it conducts. Unfortunately, its numbers are less than comprehensive. In 2014, the year of the most recently released report, less than half the surveyed American amusement parks even bothered to submit any data.
Articles abound, telling consumers to take care and use common sense when visiting amusement parks. But taken all together, when it comes to the amusement park industry, the phrase “buyer beware” is a misnomer. In many cases, the buyer—that is, you and me—has no way of knowing how safe a particular destination or specific ride is. The opening of the Verruckt, for instance, was delayed a number of times over engineering concerns, but after it opened, it had no issue garnering tons of positive press. “Here’s Why You Won’t Fall Off the World’s Tallest Waterslide,” proclaimed the Huffington Post after riders were finally allowed on it.
No one should be put in a position of risking their life just because they want to take a ride on a water slide on a hot, summer day. Even if it’s a ride that’s advertised as offering the “ultimate in water slide thrills.” It’s shameful that state and federal regulators haven’t stepped in more forcefully to ensure that rides are safe.
In fact, the lack of regulation of roller coasters, merry-go-rounds, water slides, and other amusement park attractions might be the one thing more insane than the Verruckt. It’s too bad officials haven’t seen things that way.
Walmart Needs a Friend, Buys Jet.com
Like many a bully confronted with a changing social scene, Walmart has had trouble adjusting its behavior in the face of the e-commerce boom. On Monday, it moved to bring in a younger sidekick—deals startup Jet.com—to help make the world's largest company (by revenue) more competitive with Amazon.
The deal, which Walmart expects to close before year's end, has Walmart buying Jet for $3.3 billion, which includes $300 million of Walmart shares. That's on top of $2 billion the company had pledged to spend bolstering its online business over 2016 and 2017 with investments in warehouses, grocery services, and a mobile app.
Jet is a sleekly designed site that tallies discounts based on combinations of items in your cart. Prices vary based on your ZIP code and supplier, reflecting the cost of shipping. "On one Heinz ketchup bottle we could either lose 20% if it had to ship cross-country, or make 20% if it was near," Jet founder Marc Lore told USA Today last year. "So we thought, let's give retailers the ability to compete for that ketchup depending on where the order comes from."
The acquisition is a great outcome for Jet, which debuted just over a year ago, and a familiar one for Lore, who sold his previous startup, Quidsi (parent of Diapers.com), to Amazon in 2010. (Walmart also made a bid.) Jet processes 25,000 orders a day but struggled with its business model. It had planned to make all its profits from a $50 membership fee, but later scrapped that model, and lost money in its quest to offer customers the best prices on the internet. Walmart will maintain Jet's site separately but bring Lore into a senior role, integrate Jet's software with its own, and gain access to the startup's customer base, which is younger and wealthier than Walmart's own.
Online, Walmart has tried to position itself as the blue-collar alternative to Amazon, with its ShippingPass as the poor man's Prime. As I wrote in May, that effort has brought mixed results:
Over the past two years, Walmart’s digital growth has been on a steady downward trajectory, from 20 percent growth rates in 2014 down to 10 percent, 8 percent, and 7 percent in the past three quarters.
That’s way out of step with the rest of the retail sector. Target’s digital sales rose 23 percent in the first quarter of 2016. U.S. retail sales grew 2.2 percent between the first quarters of 2015 and 2016, but e-commerce growth was at 15.2 percent during the same period, according to the Census Bureau—more than twice Walmart’s own performance.
Sometimes, these big fish/little fish acquisitions feel defensive, like an effort to control (or smite) a potential rival. (See: Amazon's purchase of Quidsi.)
That's not the case here: What Walmart's doing online isn't working, and the company is hoping Jet will help fix it.
Toronto’s Answer to Central Park Could Be a Massive Victory for Public Space
It's been three years since Toronto, boosted by its late-‘90s amalgamation with its suburbs, surpassed Chicago to become North America's fourth-largest city.
Now it may get a public space befitting the title.
On Wednesday, Mayor John Tory announced a plan to build a 21-acre park on top of the rail yards in the city's downtown core. That’s about twice the size of Los Angeles'Grand Park and considerably larger than Boston's Rose Kennedy Greenway. Under a full build-out of 27 acres, the Rail Deck Park could be as large as Chicago’s Millennium Park, which the city cites as a model.
Should the plan go through, it would be a rare and enormous victory for public space over private development, a contribution to the city that doesn’t require turning over parkland for condominiums, stadiums, or other private uses.
If Toronto can pull it off, that is.
Cities Think Strip Clubs Are Bad for Neighborhoods. This Study Says Otherwise.
The American city is built on the defense of home values by voters, politicians and planners. It’s an instinctive defense, motivated by anecdote rather than research, but it shapes the way we live.
Take strip clubs. For half a century, American planners have devised municipal codes to restrict the locations of strip clubs and other “sexually-oriented businesses,” fearing moral corrosion and neighborhood decline. The assumption that such establishments spawn “secondary effects,” a kind of halo of seediness, has been cited by the U.S. Supreme Court four times as grounds to corral them—despite the First Amendment protection for dancing as a form of speech.
But new research shows that in and around Seattle—a city not known for its perversions or moral deficiencies—strip clubs have had no effect on residential property values.
Even Time Warner Has Realized That Cord Cutters Are the Future
Time Warner is about to give consumers a bit more reason to cut the cord. The cable-network giant revealed on Wednesday that it had spent $583 million on a 10 percent stake in Hulu and had agreed to provide programming to the $40-a-month online TV service that the streaming company plans to launch early next year. Per the deal, Time Warner networks like Turner Classic Movies, Cartoon Network, CNN, TNT, and TBS will be available live and on-demand on Hulu’s new service—a service that will now be even more appealing to consumers looking to give up on their cable bundles.
The online streaming market is currently dominated by giants like Netflix and Amazon Prime, but it’s clear that Time Warner is trying to insert itself more into the game—just not too far. The company wants to open up a new revenue stream without cannibalizing its current one.
By investing in Hulu and making its current-season content available on Hulu’s soon-to-debut cable-TV service, it could gain an online market it wasn’t reaching before—but it might also cut into its own traditional cable revenues. Other companies are also rolling out bundle offerings to entice consumers with an opportunity to cut the cord without losing all their television programming. The Dish Network has Sling TV, AT&T has the U-Verse package, and Comcast offers a “skinny bundle” of TV and broadband.
None of which, of course, has been lost on Time Warner, whose entrance into the online market has been extremely slow. Time Warner launched HBO Now last year to appeal to individuals no longer interested in paying for premium channels on top of a traditional cable subscription. Since then the company has been offering streaming subscription services for some of its other popular brands, like Adult Swim. The Hulu investment is a good opportunity for Time Warner to move more aggressively into streaming, but it’s also an investment in a competitor.
Did an American City Finally Build a Good Streetcar?
Just when we were all set to consign the 21st century American streetcar to the scrap heap, Kansas City comes along and injects a sliver of uncertainty into the debate.
Streetcars have been popping up all over the U.S. in the past couple decades, in cities like Salt Lake City, Tucson, Tampa, Atlanta, and Washington, D.C. Critics say they’re badly designed, as short spurs of track, with streetcars stuck in traffic—and shoddily managed, with poor service that discourages riders from the get-go.
The proof has been in the ridership. Salt Lake’s S-Line counted about 1,000 passengers per day along its 2-mile route in 2015. Atlanta’s 2.7-mile streetcar was counting just 1,000 riders a day during the first months of 2016. In June, Tampa’s TECO line counted just 600 passengers a day!
And then there is the new streetcar route in Kansas City, which is getting 6,660 riders a day over three first three months of operation—and rising. Total ridership is 550,000 riders in just 84 days of operation. That’s an order of magnitude above its counterparts in Atlanta and Salt Lake City, and more than double ridership on the H Street Streetcar in D.C., which runs in a densely populated urban area.
Per mile, Kansas City ridership is double Phoenix’s exemplary, set-apart light rail, and on par with the Los Angeles Blue Line, one of the country’s most successful transit projects of the past few decades.