Recovery Leaves Us Better Than Before

Today on Market Vizion, we're going to talk about the creative destruction of capitalism and then how right now we're seeing all the chaos, all the destruction associated with that. But there are green sprouts coming.

I'm speaking today from inside 24,000 square feet of space that three years ago, I led a team to build this out as a massive thrift store operation to support a small private school in our community.

The business has operated profitably for that three years. Beginning of this year, things were actually going well. We were up year over year, and then COVID hit. We were completely closed for three months.

The property owner, who had just bought the property last year, decided he wanted to double our rent, and New Jersey's regulatory environment raising minimum wages by a dollar every year for the next five years. All of that combines to add about $200,000 a year to the operating costs.

So gone is the business model, and we have closed it. We've shuttered the business.

This is one of the businesses that whether we want to blame COVID, or government regulations, or all of the above, this is one of thousands and thousands of small businesses that are gone forever. Especially retail. The statistics coming through COVID are just unbelievable.

We know what the destruction is. I'm looking for the creativity.

The Massive Online Retail Shift

In 2010, online purchasing was approximately 3% to 5% of retail sales. In 2019, 10 years later, retail sales online accounted for about 16% of purchases across the country.

In June of this year, that number was 27%.

In 90 days, online retail made as much progress in terms of cannibalizing and taking over the U.S. economy as it had in the last 10 years. What's that going to do to retail? It just accelerates the death of bricks and mortar retail, right?

Combine that with institutions, organizations, and businesses that have now for the last six months figured out how to have massive percentages of our workforce work remotely. We're going to see an absolute crash in commercial office space over the course of the next three to five years.

That's the destructive part of capitalism. This evolution in the economy is absolutely destroying entire sectors. Retail and commercial office space being two of the most glaring examples. We'll talk another time about restaurants, and the evolution that's going on there.

The Silver Lining in Recovery

Here's the silver lining. This is interesting. All of those people who are working from home... If you had an hour commute each way two hours a day, five days a week, that's 10 hours a week. 50 weeks a year. That's 500 man hours that you're not commuting when you're working remotely.

Do you can find a way to improve your life, or quality of life, or your productivity at work if I handed you 500 hours a year? That's 12.5 working weeks a year. Think about that recapture of time.

Time is that one resource we can never get back, and now we've got us a substantive percentage of our workforce that's going to be able to claw back some significant percentage of that because they're working remotely. And even if they have to go back to work someday in some way, they're still recapturing that.

Now, here's the interesting thing. You have 500 more hours. You're going to start an exercise program. Spend more time with your kids. Start a date night. You're going to do something and improves the quality of your life, right?

Here's the one thing you couldn't do when you were driving, unless you were really creative. You couldn't spend money. So, I'm going to give you a 500 more hours a year. What are you going to do with it? You're going to spend more money. And when you spend more money, it drives up economic growth.

New Spending Habits in New Economy

That money is going to get spent way differently moving forward. It's not going to get spent on bricks and mortar retail. It's not going to get spent on office commercial. It's not going to get spent in this kind of restaurant. It's going to get spent in that kind of restaurant. The whole world, the axis is shifting economically.

But the point is: right now we're seeing the destructive forces associated with capitalism, but there's green sprouts. There's green sprouts coming. We are keeping an eye out for and looking for where those opportunities are, of course, online retail.

If you look at the market caps, and PE ratios, and all the statistics associated with anybody who's any publicly traded online retailer, wow. Boom. Right? Off the charts right now. There's going to be a creative process and evolutionary process that goes on.

Here's what I want to ask you to do before we finish. I want to ask you to keep an eye out for what happens to the retail and office space in your community. If you find an article, if you see an advertisement about repurposing of real estate, let me know. Because that's one of the things I'm most interested in is where will that creativity start to flow?

Is it going to be low income housing? Is it going to be kind of something to support the gig economy? What is this going to look like? Are these places going to be gutted and turned into Amazon warehouses? Are these places going to be gutted and turned into apartments? What does that creative process?

We know what the destruction is. I'm looking for the creativity.

While we finish up here ripping out A to Z and finishing up, you hear some things clicking around behind me, scraping on the floor. But here at Vizionary Wealth Management, we're always here with perspective for the decisions ahead. Contact us anytime. Reach out anytime. Have a great day.