TJX TJX Companies Inc

By Brian Baskin 

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The changes e-commerce is forcing on the physical retail world are accelerating. Brick-and-mortar stores are shuttering at a record pace this year, and experts say the rash of closings is only the beginning, the WSJ's Suzanne Kapner reports. Last week, Bebe Stores Inc. and Rue21 Inc. became the latest mall staples to announce they would shut down hundreds of locations, pushing the number of closed stores to nearly 3,000 this year. The growth of online shopping is the primary force behind the trend, but not the only one. Also to blame: a decades-long rush by retail chains to open as many locations as possible, fueled in recent years by record-low interest rates. Some analysts compare the rise and fall of mall staples like The Limited and Wet Seal to the housing boom and bust. Some retailers, including discounter TJX Cos., continue to expand, though that chain's brands thrive by stealing customers from ailing department stores. Much of the rest of the industry has given up waiting for a recovery at the mall, and are hoping increased online sales can make up for a permanent in-store slump.

Automakers are setting up electric-vehicle manufacturing plants in China, betting the rewards of tapping a booming new market will outweigh the risks that previously led them to steer their supply chains clear of the country. General Motors Co., Volkswagen AG and Toyota Motor Corp. said at last week's Auto Shanghai show that they would produce electric cars in China, the WSJ's Trefor Moss and Mike Colias write. Intellectual property concerns and uncertain demand have held back auto manufacturing in the country in the past, but the Chinese market for electric vehicles has become too big to ignore, industry insiders say. China drove about half of global demand for EVs last year, and automakers expect Beijing to require a growing share of cars sold to have domestically produced parts. That's forcing automakers to set aside concerns their technology could be copied by local suppliers, as the alternative - being shut out of a potentially massive market - is even worse. Analysts aren't sure future demand will materialize: one forecaster gave a range of 650,000 to 2 million EVs sold in China in 2020.

Developers can't build warehouses fast enough. Industrial tenants absorbed 1.7 million square feet in New Jersey in the first quarter, up about 30% from a year ago, despite an 11.7% increase in rent, according to real-estate services firm JLL, the WSJ's Keiko Morris reports. The insatiable demand for space is being driven by the needs of e-commerce giants like Amazon.com Inc. , which last week announced plans to open three fulfillment centers in New Jersey totaling 2.8 million square feet. Some, including No. 1 industrial real-estate landlord Prologis Inc., predict an increase in speculative construction, where buildings are planned before a tenant is lined up, will cause the market to cool. But JLL noted that in the New York area at least, developers can typically find a tenant well before completing construction on speculative distribution centers. The firm said soaring rents are a "new normal" for industrial tenants. With vacancy rates down to 4%, from 5.9% a year ago, landlords remain firmly in control.

ECONOMY & TRADE

France's presidential election is shaping up to be a referendum on the European Union. Emmanuel Macron and Marine Le Pen won the first round of voting, and will face off in a second vote next month. The campaign is viewed by some investors as potentially more important for global trade and financial markets than even the U.K.'s Brexit vote or the election of President Donald Trump, writes the WSJ's Riva Gold. Marine Le Pen has vowed to take France out of the euro, which would could force the disintegration of the common currency. Victory for an anti-EU candidate would lead companies, from insurers to banks to international corporations, to pull money out of France, analysts say. It would also further weaken support for the continent-spanning single market, which eases the flow of goods between countries and allows manufacturers to easily set up supply chains spanning multiple countries. Many of Ms. Le Pen's supporters say that's precisely why they are voting for her, blaming the EU for the loss of French factory jobs to countries like Poland, where labor costs are lower.

QUOTABLE

IN OTHER NEWS

President Donald Trump will insist on funding for a border wall as part of any budget deal, an administration official said. (WSJ)

Existing home sales in the U.S. rebounded in March as the spring buying season began. (WSJ)

Stores need to make better use of customer data and offer greater personalization to fend off online competition. (WSJ)

New England businesses are struggling to find workers in a tight labor market. (WSJ)

Suppliers are fighting back as failing retailers struggle to pay their bills. (Bloomberg)

Trading of Yang Ming shares was halted in Taiwan so the container line could reduce its equity capital by half. (Splash 24/7)

Kansas City Southern reported higher first-quarter revenue and profits. (Progressive Railroading)

Panalpina's profits fell as the forwarder's air-cargo volumes rose but margins declined. (Air Cargo News)

Navios Maritime Partners will buy 14 container ships from shipping line Rickers Maritime. (Business TImes)

Rising capacity and wavering demand are threatening car carriers. (Journal of Commerce)

Quiet Logistics opened a hub in Missouri to fulfill e-commerce orders. (DC Velocity)

Trucks powered by natural gas are failing to gain traction as diesel prices remain low. (Transport Topics)

Sears Holdings will close 50 auto centers at 92 Kmart pharmacies. (Chicago Tribune)

ABOUT US

Brian Baskin is editor of WSJ Logistics Report. Follow him at @brianjbaskin, and follow the entire WSJ Logistics Report team: @PaulPage, @jensmithWSJ and @EEPhillips_WSJ and follow the WSJ Logistics Report on Twitter at @WSJLogistics.

Subscribe to this email newsletter by clicking here: http://on.wsj.com/Logisticsnewsletter .

Write to Brian Baskin at brian.baskin@wsj.com

(END) Dow Jones Newswires

April 24, 2017 06:46 ET (10:46 GMT)

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