Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
AI Stocks Portfolio and Tesla - 23rd May 24
All That Glitters Isn't Gold: Silver Has Outperformed Gold During This Gold Bull Run - 23rd May 24
Gold and Silver Expose Stock Market’s Phony Gains - 23rd May 24
S&P 500 Cyclical Relative Performance: Stocks Nearing Fully Valued - 23rd May 24
Nvidia NVDA Stock Earnings Rumble After Hours - 22nd May 24
Stock Market Trend Forecasts for 2024 and 2025 - 21st May 24
Silver Price Forecast: Trumpeting the Jubilee | Sovereign Debt Defaults - 21st May 24
Bitcoin Bull Market Bubble MANIA Rug Pulls 2024! - 19th May 24
Important Economic And Geopolitical Questions And Their Answers! - 19th May 24
Pakistan UN Ambassador Grows Some Balls Accuses Israel of Being Like Nazi Germany - 19th May 24
Could We See $27,000 Gold? - 19th May 24
Gold Mining Stocks Fundamentals - 19th May 24
The Gold and Silver Ship Will Set Sail! - 19th May 24
Micro Strategy Bubble Mania - 10th May 24
Biden's Bureau of Labor Statistics is Cooking Jobs Reports - 10th May 24
Bitcoin Price Swings Analysis - 9th May 24
Could Chinese Gold Be the Straw That Breaks the Dollar's Back? - 9th May 24
The Federal Reserve Is Broke! - 9th May 24
The Elliott Wave Crash Course - 9th May 24
Psychologically Prepared for Bitcoin Bull Market Bubble MANIA Rug Pull Corrections 2024 - 8th May 24
Why You Should Pay Attention to This Time-Tested Stock Market Indicator Now - 8th May 24
Copper: The India Factor - 8th May 24
Gold 2008 and 2022 All Over Again? Stocks, USDX - 8th May 24
Holocaust Survivor States Israel is Like Nazi Germany, The Fourth Reich - 8th May 24
Fourth Reich Invades Rafah Concentration Camp To Kill Palestinian Children - 8th May 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