HCal wrote: ↑March 4th, 2022, 4:24 pm
If businesses stop deploying capital in California, that will increase the return for whoever does, and cause a new equilibrium to be reached.
Obviously other states with lower populations are going to be growing faster and have more investment opportunities than a mature market like CA, and that's perfectly okay. Companies may choose to chase higher returns elsewhere, but this isn't going to hurt California's economy because, as I mentioned, the lack of investment will increase returns for willing investors.
I don't think shoplifting has anything to do with price levels or inflation. It happens all over the country, but of course the media likes to report on it when it happens in California because it fits a certain narrative.
No, it will mean whoever does deploy capital in California will end up cutting corners to get an acceptable return and since there isn't as much competition they will get away with it- making the stores smaller than new stores in surrounding states, jacking up the prices to come even close to getting an acceptable return on investment in the state, etc. Why do you think nobody to speak of is building 80k square foot heavy perimeter service counter model type grocery stores in California like we see in the midwest, South (excluding FL..), and Eastern US? It is because the idea doesn't pan out in CA. Nobody does it. So you get the few operators willing to deploy capital in California and they put up undersized 50k square foot stores that are inferior to stores in surrounding states. So you end up with a bunch of new Sprouts, Trader Joe's, Grocery Outlets, or dumbed down Whole Foods (365 like stores but with the full prices of a normal Whole Foods) stores that are undersized with limited or even no perimeter service counters (to save labor and save space) instead of a nice new Wegmans or Hy Vee or even a marketplace format Kroger Store or a Market Street format Albertsons Store you get a smaller limited service format. At least in the case of Trader Joe's the prices are pretty good.
Talk to anyone involved in retail loss prevention about theft rates in CA vs. those in the rest of the US. For an even more like for like comparison, go with major metro areas in CA vs. major metro areas elsewhere in the US. The difference is, not to bag on any one place, let's just say Tulsa. You may have 1/2 of the stores in Tulsa considered very high theft. For whatever reason the theft rings stick to a certain portion of the city and don't really go into other parts or far reaching outer areas of the metro at least not to the extent to make a noticeable theft uptick and kick the store into the high theft column. But if we are talking metro Los Angeles, Oakland, etc. you are talking basically 90% of the stores being considered very high theft due to the theft rings that have penetrated the entire metro areas. Even areas in CA that previously had little problem with theft, such as places far outside the large cities (let's use Roseville as an example around Sacramento) since COVID hit, have seen pretty significant theft upticks in those stores. Yes, it happens in other states, but not to the degree it is happening in CA, yet.