Both Staples and Radio Shack announced store closings this past week. CNN Money offers up a short but highly informative explanation of what’s up with these and other retail store closings. A key point:
Part of the problem for stores is that there is just too much retail space in many markets. There are about 46 square feet of retail space for every man, woman and child in the United States, according to Robin Lewis, CEO of The Robin Report, a retail strategy newsletter. That’s five times the space than in any other country,
“We’ve had overcapacity in this country for a long, long time,” said Lewis. “The economy now has gotten to the point where it is forcing [retailers] to contract.”
So are Amazon and other online retailers to blame for recent store closings? Yes, but only to a degree:
The growth in online sales is simply making problems at some chains more severe, experts say, not causing the problem by itself.
“It is too simple to say this is what Amazon has wrought,” said [Greg Apter, president of Chicago-based Hilco Real Estate]. “But the online business makes the market more saturated. That’s enough to turn what might have been 100 store closings into 120.”
In fact, the UPoR headline is “likely dead.” Is this somehow surprising? Yes and no. No, in that the proposal by Brett Hesse’s group never really got over the giggle test, especially with its reliance on turning the site in part into a pricey tourist trap. Government entities are capable of massive denial though, so that alone wouldn’t have stopped the project (see: NASCAR Hall of Fame.) And a lot of people on the east side want to see this happen. Which gets us to why this is rather shocking — all that Hesse had to do is play along, give the city the numbers they were looking for, and not piss anyone off down at city hall. Obviously, he massively failed in his recent dealings with the city. PR and star power will only get you so far. At some point, you do have to show at least some money and have at least a semblance of a coherent business plan, and it’s become painfully clear recently that Hesse has neither.
My JLF colleague Dan Way offers up the latest on the Catawbas attempt to build a casino. Or, as Dan reports, two, one on each side of the state border. Because of the local interest, here’s the article in full:
RALEIGH — While the Catawba Indian Nation awaits a ruling from the U.S. Department of the Interior on acquiring land in Cleveland County to build a $340 million resort/casino, it is battling in South Carolina courts to create a similar gambling property on its border reservation in Rock Hill.
“If the tribe does have a positive ruling from the South Carolina Supreme Court, there are no plans to abandon our project in the state of North Carolina,” said tribal spokeswoman Elizabeth Harris.
“The tribe maintains its right to take land into trust in North Carolina, and will continue on the path of a world class resort in Cleveland County,” Harris said.
Attorneys for the tribe appeared in Columbia Jan. 22 before the South Carolina Supreme Court.
“The basis of the lawsuit is a 2005 law passed by the state called the Gambling Cruises Act,” Harris said.
The act authorizes “any game of chance and includes, but is not limited to, slot machines, punchboards, video poker or blackjack machines, keno, roulette, craps, or any other gaming table type gambling or poker, blackjack, or any other card gambling game,” Harris said.
In 1993 the tribe entered into a settlement agreement with South Carolina and the federal government. In exchange for relinquishing historic claims to 144,000 acres of aboriginal lands lost through a broken treaty, the Catawbas, among other things, were granted an exclusive right “to have the same gaming as authorized within the state,” Harris said.
“Therefore, the tribe feels that we have the right to do the same on tribal lands” as is authorized by the state for gaming cruises from South Carolina ports, Harris said. “We felt that the tribe’s lawyers did a wonderful job explaining these points to the Supreme Court.”
Billy Wilkins, former chief judge of the U.S. Court of Appeals for the 4th District who argued the case for the Catawbas before the Supreme Court, declined a request to comment on the case, though a spokesman said it was unclear when the justices would issue an opinion.
“Because the case is pending in the court, it would be inappropriate for us to comment at this time,” said Mark Powell, communications director for the South Carolina Attorney General’s Office, which argued the case for the state against the Catawba suit.
The 1993 federal agreement also allows the tribe to expand its 1,006-acre reservation in Rock Hill to between 3,600 and 4,200 acres in a designated federal service area that includes Cleveland and five other North Carolina border counties.
Land acquired under the agreement must be placed in federal trust. That is the process the Catawbas are pursuing with a 16-acre purchase in Kings Mountain on which the 220,000–square-foot casino, two hotels, retail, and entertainment outlets would be located.
“The Catawba Tribe’s gaming application is still under review,” said Nedra Darling, a spokeswoman in the Office of Assistant Secretary of Indian Affairs in the Interior Department.
State Rep. Tim Moore, R-Cleveland, an attorney, is representing the Kings Mountain landowners who are in partnership with developers. He said his clients are not gambling companies.
“Nothing can be purchased formally until the Bureau of Indian Affairs approves … the transfer of the land” into federal trust, Moore said. “Our clients are working through that process with the Department of Interior.”
The landowners are “very encouraged” about the federal process, Moore said. “Everything has proceeded according to schedule, and the comments I’ve heard thus far have been very receptive.” He has been doing title searches, and preparing the deeds for the land transfer.
Much of what the Bureau of Indian Affairs is sorting out is whether placing the land in federal trust is mandatory or discretionary.
“Our argument is that it’s mandatory because it meets all of the criteria,” is properly done, approved by the tribe, is within the defined service area, and the property is free and clear, Moore said. “That is what I am in the process of arguing for my clients, not the policy or political arguments.”
Despite opposition to the project from Gov. Pat McCrory, Attorney General Roy Cooper, Insurance Commissioner Wayne Goodwin, House Speaker Thom Tillis, Senate leader Phil Berger, and more than 100 lawmakers, Moore said his understanding is that such objections have little to do with Interior Department decision-making.
Conversely, he said, “There’s been very much locally a great deal of support for this project” among local governments and residents who view it as an economic development bonanza for a financially struggling area.
Harris said the Catawbas estimate the casino complex would create up to 4,000 permanent jobs and generate sorely needed revenue for a 2,900-member tribe whose average annual household income is about $11,000 and who endure an unemployment rate of about 22 percent.
“My thoughts are that as more folks find out about the project there’s less resistance and, in fact, support,” Moore said. “The way that it’s been spun up at times is that it’s a South Carolina tribe coming in to take North Carolina money or something. [The Catawbas] have tribal members in both North and South Carolina, … They were here long before a lot of our ancestors were.”
Moore also finds those who think they can end Indian gambling in North Carolina are destined to be disappointed.
“The horse is out of the barn on that,” he said. “We have a casino already in North Carolina. In fact, the Cherokee are getting ready to build a second. … The question is why would one federally recognized tribe be treated differently than another?”
John Rustin, president and executive director of the North Carolina Family Policy Council, said his organization opposes the casino project on social and economic grounds.
“While it may generate some revenue for the tribe, casinos, especially regional casinos like this, have been shown over and over again to cannibalize the local economy,” Rustin said.
There are “substantial increases” in gambling addiction, bankruptcy, crime, domestic violence, child abuse, divorce, and suicide when there is a casino within that community, he said.
“We respect their opinion, but we would just hope they also would respect ours, and be open-minded about it, and look more at the economic impact than their personal feelings about gambling,” Harris said.
An entertainment establishment “can’t be the ones that police everything for everybody” who may have a variety of personal weaknesses and social problems.
Rustin’s opposition echoes South Carolina’s position that the Catawbas’ claim of a right to open a casino in that state due to the Gambling Cruises Act is specious because the gambling boats only anchor in South Carolina ports.
They go on so-called “cruises to nowhere” outside of state territorial waters before the games of chance begin, “therefore that casino-style gambling is not taking place within the state of South Carolina,” Rustin said.
However, in their final petition to the Supreme Court, the Catawbas counter that the federal Johnson Act empowers the state of South Carolina “to regulate gambling within the federal territorial waters that lie beyond the state waters [the three-mile limit] just as the state has certain regulatory authority on the federal trust lands that constitute the Catawba Nation’s reservation.”
The state uses its power to regulate the use of certain gambling devices on the boats, and has a tax scheme “which permeates the gambling operations both during the cruise and on shore,” the brief states.
Private citizens, corporations, and local governments are profiting from the state’s authorization of video poker and other electronic devices while denying parity to the Catawbas “in direct contravention” of the state and federal settlement agreement granting the tribe gaming rights “to the same extent” others are given, the brief states.
So reports the Fayetteville Observer:
The home of the nation’s airborne forces may lose the only Fort Bragg unit capable of hauling paratroopers long distances.
An Air Force plan divulged in budget documents released Tuesday calls for retiring the force’s aging C-130H fleet.
On Fort Bragg, 12 C-130H planes constitute the entire 440th Airlift Wing inventory.
And what other Air Force unit based in North Carolina flies the C-130H? The N.C. Air National Guard based here in Charlotte!
Will attempt to track down the Air Force’s detailed budget documents to see exactly what’s going on.
Update: Here’s an October story from the Air Force Times on the debate about the number of C-130s the Air Force needs.
To the Greensboro News & Record, available here via the Winston-Salem Journal (the two papers are now owned by the same company) about his time at Duke Energy. The tease from the story:
Gov. Pat McCrory worked at Duke Energy for 29 years. That’s what his resume says. Other than a few short sentences about his areas of work, his biography says nothing else about his career. Duke Energy officials aren’t talking. Well-connected state and local leaders aren’t saying. Charlotte City Council members aren’t sure. And McCrory hasn’t said. Until now.
Schedule changes of note:
• US Airways’ Charlotte – Rio de Janeiro won’t end early last year as previously reported. Nope, it won’t even make it to October. The last day is September 12 from Charlotte and September 13 from Rio.
American Airlines currently flies from Charlotte to New La Guardia, Miami, and Chicago O’Hare using high cost per seat mile regional jets. Unsurprisingly, these flights will soon be ending. The net results by market:
• LGuardia: American flies this route 4 times a day (until recently it was 5 times a day) on CRJ700 large regional jets. These flights end on March 31. This leaves US Airways with 13 flights a day on the route, including 10 mainline.
• Chicago O’Hare: Goes from 8 US Airways flights on Airbus A320s or A321 and 5 American flights on 50-seaters in May to 9 US Airways A320s or A321s and a single CRJ900 large regional jet in June.
• Miami: Goes from the current 7 US Airways A320s or A321s and 5 American 50-seaters to 9 US Airways A320 or A321s in June.
(Put that all together and it’s an 12 flight reduction from Charlotte, almost all of which was completely expected.)
Some service changes that don’t impact Charlotte but show how the new combined hub structure can impact smaller cities:
• American Airlines flies from Chicago to Watertown, NY twice a day on 50-seat regional jets. This is a federally-subsidized Essential Air Service route. It’s also a 617 mile haul. In May though, US Airways takes over the route, with service to Philadelphia instead of the Windy City. It’s only 287 miles from Philly to Watertown.
• American Airlines is ending its Los Angeles – Santa Barbara service. The airline flies the 89-mile route four times a day. Obviously this route exists only because of connecting traffic but there’s a better option for that now: US Airways offers Phoenix – Santa Barbara flights.
Expect more of these sorts of changes in the future as the merging airlines continue to rationalize their network.
Through October 31, 2014. And answers to the two key CLT-related questions:
• CLT’s second Houston Hobby flight is summer seasonal only. Which means come the fall, we’re back down to 2 x Baltimore, 2 x Chicago Midway, 1 x Houston Hobby, 1 x Orlando. The prospects for additional flights from the Queen City on Southwest remains low.
• GSP lives, at least for the moment. The airline is continuing with service from Greenville-Spartanburg. They’re still at four a day (2 x Chicago Midway, a x Baltimore, 1 x Houston Hobby).
Subject to expanded police powers to search people? Got me. As the Charlotte Observer reports, what qualifies is apparently rather random. ACC football championship game: No. Belk Bowl: No. New Year’s eve: Yes. CIAA tournament: Yes. Speed Street: Yes.
When asked about events such as the Belk Bowl and the ACC Championship, [City Manager Ron] Carlee said he didn’t think their crowds were large enough to spur the special designation.
“I don’t know if those are as big as the CIAA and Speed Street,” Carlee said. “It’s a sense of the overall size of the crowd.”
He added: “Do we see any inherent danger with the CIAA and Speed Street? No.”
With OKC being Oklahoma City while TUL is Tulsa. Per the Charlotte Observer, flights start on July 2 and are twice-daily on large regional jets (have a first class section). Service levels are comparable to Des Moines and Omaha, which US Airways added flights to from CLT in 2012 and are of similar size and about the same distance from the Queen City.
The addition of flights to these two cities isn’t a surprise as they are the first and fourth largest markets lacking a nonstop within 1,200 miles of Charlotte. They are also the two unserved cities in which American Airlines is the strongest. Put another way, this is the low-hanging fruit in terms of connecting the dots from the merger. Indeed, US Airways adding Oklahoma City was pretty much inevitable — remember, the airline tried to get an additional Washington Reagan National slot with the additional hook being that it would add twice daily CLT-OKC flights as well if it won (it didn’t).
More analysis later.
The John Locke Foundation and NC WARN — yes, you are reading that right — co-sponsored a forum highlighting the need for increased competition in North Carolina’s electric market. The entire event runs nearly two hours but there’s a ton of fascinating information that the speakers bring up. If you have an interest in energy policy, it’s well worth your time to watch the video of the fourm, which is available here.