Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Toys R Us Not the Only Major Retail Casualty

Companies / Retail Sector Mar 27, 2018 - 06:35 AM GMT

By: Harry_Dent

Companies Toys R Us just joined the unenviable list of top retail failures of the past decade: Circuit City, Linens-N-Things, A&P (the Great Atlantic & Pacific Tea Company), Sports Authority, and Radio Shack (whose downfall we called in 2016).

While there are many reasons for the loss of these once household names, and Toys R Us is citing massive debt burdens as one element in its undoing, there is a much bigger – and more predictable – underlying factor.


Demographics!

It’s not hard to figure out when toys are most in demand. Age 5 is the peak for kids. There’s a plateau between the ages of 5 and 9. And then a steep drop-off… kids grow up and graduate to alcohol and ecstasy parties instead.

Look at this chart (we have everything from cradle to grave).



And, by the way, for kids, spending on babysitting peaks at the same age as spending on toys: 5 for kids, 33 for their parents.

And calorie intake peaks at age 14 (so spending on potato chips peaks at 42 for parents).

And height peaks at age 19…

And those “minor” bills for college education? They peak when parents are 51 years old on average.

Got any other questions about spending peaks? We’ve got the answers!

But back to toys…

On a 5-year lag, toy spending would have peaked for the Millennial generation in late 2012. With the plateau into age 9, spending would have stayed buoyant into late 2016. After that? Tickets baby!

Toys R Us was a victim of two key trends in our time: debt and demographics.

But probably more important: Toys R Us (and Lego is in trouble as well) is a leading indicator of our entire economy ahead, when endless free money and stimulus hits its nasty hangover.

For Toys R Us, it was a classic leveraged buyout, with $5.3 billion in debt pledged against assets and $7.9 billion in total debt.

Leveraged up to its eyeballs…

And by my old employer, Bain & Company (Bain Capital). If only they’d consulted me before entering a collapsing demographic sector.

Retailers are also leading defaults at three times average for American companies in a shrinking environment… due to slowing demographic trends (more from the aging Baby Boomers) and competition from the almighty Amazon and online retailers… “Heil Bezos!” 

Debts will quickly be written off, but demographic trends will continue down into at least 2028.

This is literally a dying industry, but from younger kids, not older Boomers. We’re likely never to see higher birth rates than 2007 again, as I’ve been warning for decades now.

If you’re in the nursing home/assisted living sector, brace for incredible growth in the years ahead, as Baby Boomers age into 2045-plus.

If you’re in a child-focused business, convert childcare centers into assisted living centers. And if you are in the diaper business, focus on adult diapers, not baby diapers.

Demographics will always steer you in the right direction for investment and business.

Harry

http://economyandmarkets.com

Follow me on Twitter @HarryDentjr

Harry studied economics in college in the ’70s, but found it vague and inconclusive. He became so disillusioned by the state of the profession that he turned his back on it. Instead, he threw himself into the burgeoning New Science of Finance, which married economic research and market research and encompassed identifying and studying demographic trends, business cycles, consumers’ purchasing power and many, many other trends that empowered him to forecast economic and market changes.

Copyright © 2018 Harry Dent- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Harry Dent Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in