Retail Sales Soar As Consumers Continue To Swipe-In The Holiday Season

According to McKinsey & Company, U.S. retailers in 2017 and 2018 alone have vacated a quarter of a billion square feet and announced more than 6,000 store closures in August 2019 year-to-date.

The empty retail spaces certainly haven’t helped real estate investment trusts (REITs) such as Simon Property Group (NYSE: SPG) – which owns malls where store closures such as Forever 21 are growing more frequent.

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Shares of Simon Property Group have plunged nearly 16.5% from its latest 52-week peak set in mid-April 2019. The REIT was also down about 1.5% intraday Monday, according to the IBKR Trader Workstation.

To compete with online shoppers, the physical shopping experience appears to be transforming from the traditional food court-style shopping mall to megaplex entertainment centers.

The Triple Five Group and Colony Capital (NYSE: CLNY) owned American Dream mall in East Rutherford, New Jersey, for example, boasts 450 retail shops, alongside over 100 eateries, an indoor ice rink, cinema, mini-golf course, rock climbing and bowling alley, as well as a Nickelodeon Universe theme park and DreamWorks Water Park, among other facilities.

Los Angeles-headquartered real estate firm Colony Capital, which holds a stake in American Dream along with Canadian conglomerate Triple Five Group, had seen its stock soar over 38% following the first of a four-phase opening of the mega-center on October 25.

The following three stages are set for later in 2019 and early 2020.

As physical store retailers continue to adjust to the ongoing transformation of the consumer landscape, market participants will likely be keeping an eye on how their related retail stocks, ETFs and REITs are other funds are performing in line with the changing trends.

In the meantime, investors set to receive updated retail sales figures for November on Friday, December 13 from the U.S. Census Bureau.

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The author does not hold any positions in the financial instruments referenced in the materials provided.

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