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Business

NEW YORKIt used to be considered the

retailer’s crown jewel – a large-format store on a swank corridorthat showed off the best of whata brand had to offer.But now the so-called flagship

store is disappearing from high-profile shopping thoroughfareslike New York City’s MadisonAvenue and Chicago’s Magnif-icent Mile because of skyrocket-ing rents and the shift to onlineshopping.Over the past year or so, Gap,

Tommy Hilfiger, Lord & Taylorand Polo Ralph Lauren haveclosed their flagship stores onFifth Avenue. Abercrombieannounced in May that it wasclosing an Abercrombie store inMilan, an Abercrombie store inFukuoka, Japan, and a Hollister-branded store in New York’sSoHo area. The announcementcame after the teen retailer shutdown flagships in Hong Kongand Copenhagen.Other retailers are re-imagin-

ing the flagship concept insteadof abandoning it altogether.Nike, for instance, opened amassive store on Fifth Avenuelate last year that doesn’t have

any cash registers. It lets shop-pers see details of items dis-played on a mannequin by scan-ning the QR code and then hav-ing those items delivered to afitting room or a designatedpickup spot. Levi Strauss & Co.’snew flagship in New York’sTimes Square features largerdressing rooms with call buttonsand tailors who can add trimsand patches to customers’ jeans.Those still clinging to the old

concept, however, are having aharder time. The latest victimcould be Barneys New York,which opened its 10-story Madi-son Avenue store in 1993 andbecame a cultural icon in luxury

shopping, but now risks closure.High rents and a dramatic shifttoward online shopping arepressuring it to evaluate restruc-turing options, including pos-sible bankruptcy, according to asource close to the matter whoasked to remain anonymousbecause the discussions areconfidential.Joseph Aquino, who runs his

namesake real estate servicesfirm, says the days of the shop-’til-you drop mentality on Madi-son Avenue popularized by theHBO popular series of the 1990s“Sex in the City” are over.“She was 45 and now she is

65. … She isn’t shopping like shewas 45,” Aquino said. “We arein the phase where a lot ofyounger shoppers don’t want togo the high street. They sitaround and buy online, andthat’s what we are fightingagainst.”The concept of a flagship store

is more than a century old andused to be limited to a retailer’sbiggest store – one in the first ormost prominent location. But inthe past 20 years, a flagship

store frenzy took hold and retail-ers from Gap to H&M looked atthem as a must-have shrine totheir brands, opening multipleflagships in multiple locations.Not only that, they were willingto pay exorbitant sums of moneyto showcase their merchandisein luxury corridors.However, many retailers now

can no longer justify the highprice, especially as rents rise andmore shoppers shift their spend-ing online, causing a loss in foottraffic.CoStar Group, a real estate

research firm, examined retailleasing at luxury corridors inseven cities: Miami’s LincolnRoad; Los Angeles’s GoldenTriangle; Chicago’s MagnificentMile; Washington, D.C.’sGeorgetown district; Boston’sNewbury Street; New York’sFifth Avenue; and San Francis-co’s Union Square. It found thevacancy rate shot up to 7% lastyear from 3% in 2017 – greaterthan the 4% those areas saw inthe Great Recession.Last year, the net number of

retail square footage lost inthese corridors topped 353,000,surpassing the 214,000 loss ofsquare feet seen in 2009. Theloss was exaggerated by Macy’sclosing of its big store in SanFrancisco’s Union Square, butCoStar found that excluding thatstore, every high-end shoppingcorridor it tracked saw a weak-ening trend.As a result, rents on Madison

Avenue and Fifth Avenue havetaken a hit as demand for theselocations have fallen. Averageannual asking rents for ground-floor locations for the Fifth Ave-nue strip between 49th and60th streets was $2,779 persquare feet in the first quarter of

RICHARD DREW AP

Levi Strauss & Co.’s new flagship in New York’s Times Square features larger dressing rooms and tailors who can work on customers’ jeans.

Once a shrine to aretailer’s brand, flagshipstores losing their lusterBY ANNE D’INNOCENZIOAssociated Press

SEE STORES, 2C

‘‘I ASSOCIATE BIGSTORES WITH LONGFITTING LINES AND BIGCROWDS. UNLESS IT ISSOMETHING THATOFFERS A DIFFERENTEXPERIENCE, I’M NOTINTERESTED.Caroline Nash, 18, ofWashington, D.C.

The 401(k) and other forms ofemployer retirement plans areimportant and useful while youare in the contribution phase oflife.When you switch direction in

retirement and begin makingwithdrawals from your savingsand investment earnings, it can

be helpful to roll over your em-ployer retirement account to anIndividual Retirement Account(IRA).If retirement account balances

are in an IRA, two strategiesbecome available that generallyaren’t allowed from employerplans: They are qualified char-itable distributions and RothIRA conversions. Both improvetax efficiency and are under-utilized. If you can manage your

assets in a more tax-friendlyway, you may increase yourinvestment returns withouttaking more risk because youwill have more dollars left tospend in the after-tax world.If you are over age 70½, have

a pre-tax retirement account andmake donations to nonprofitorganizations via check or creditcard, you may want to stop.Instead, you can send qualifiedcharitable distributions from

your IRA directly to the non-profit organizations that yousupport. Rather than using yourcash to make your donation withafter-tax dollars, you can donatepre-tax dollars out of the IRA.This strategy is different than

transferring investments withcapital gains to the nonprofitorganization. That is anothergiving strategy for non-retire-ment accounts which no longerallows a tax deduction for manypeople. With a qualified char-itable distribution (QCD), youinstruct the custodian of youraccount to make a check paya-ble from the IRA directly to thecharity. As long as you are al-

ready 70½, you can do this withup to $100,000 per year. Youwon’t owe federal income tax asyou would for other IRA with-drawals.Make sure to adequately note

these donations on your taxreturn. The tax-related docu-ment you receive from yourcustodian reflecting IRA with-drawals (1099-R) doesn’t codethis transaction to clearly label itas an untaxed withdrawal. Someaccountants even miss this ifyou don’t give them a heads upabout your giving from the ac-count.

Transferring 401(k) funds to an IRA atretirement opens up some benefitsBY GARY BROOKSContributing writer

SEE BROOKS, 2C

edly) an inside job, the perphaving worked for Amazon’scloud-service operations thathosted Capital One’s credit-carddata.Public reaction tends to be

muted to these announcements,not just because there have beenso many of them but because:

A Individuals can’t on theirown do much to stop the theft ofdata short of disconnecting fromthe digital world. You can takesteps to protect physical assetslike your home or your car, al-though those measures are hard-ly guaranteed to repel all mis-creants, but even if you takesteps to protect your information(like not handing it over to peo-ple calling on telephone scams),there’s so much informationabout you in the hands of banks,insurers, health-care providersand the government whosesecurity you have no way ofensuring.

AThe theft of the data mayproduce some spectacular num-bers in the aggregate — 100

million individuals! — but theactual impact at the individuallevel is much tougher to see oradd up to get a sense of how bigthe problem is. Monetary lossesdue to data theft might not evenget reported to authorities (thevictim doesn’t notice until it’stoo late or is too embarrassed),and thus, outside of the occa-sional anecdote, generate littlepublic attention.

AAnnouncements of securitybreaches and data thefts areoften accompanied by reas-surances that nothing of conse-quence was taken and the in-cident isn’t as bad as it mayappear. Consider this statementfrom Capital One: “Importantly,no credit card account numbersor log-in credentials were com-promised and over 99 percent ofSocial Security numbers werenot compromised. No bankaccount numbers or Social Secu-rity numbers were compro-mised, other than: About

cards that had been handed overat merchants for payment, as-sembling lists of names andaccount information was a slowand laborious job.But just as the miracle of dig-

ital technology has revolution-ized and streamlined media,entertainment and retailing, sotoo has it made the harvesting ofprivate information for illegalpurposes far more efficient.Why go to the risky and grub-

by work of physically collectingpersonal information — names,addresses, Social Security num-bers, credit card and bank ac-count numbers — when some-

The criminal element used tohave to work a lot harder to stealyour personal information.Whether through lost or stolen

wallets, credit-card slips re-trieved from trash receptacles,numbers lifted directly from

one has not only done the workfor you (and in volumes youcould never hope to duplicate onyour own through conventionalmethods) but made it availablewith a few keystrokes?The Capital One data breach

is merely the latest in a depress-ing series of announcementsabout information thefts, al-though this one is notable forthe prominence of the company,the size of the theft (100 millionindividuals in the United Statesand 6 million in Canada, accord-ing to the company), that thealleged perpetrator is from Seat-tle and that it was (again alleg-

COMMENTARY

Who’s in your wallet? CapitalOne breach shows vulnerabilityof online financial information

BY BILL VIRGINContributing writer

SEE VIRGIN, 2C

The News Tribune, 8/4/2019 Cropped page Page: 2C

Copyright 2019 Olive Software 8/4/2019 11:57:56 AM

2C SUNDAY AUGUST 4 2019Business THENEWSTRIBUNE.COM

While some apps helpyou save money, othershave a way of encouragingyou to spend more.Changing how you con-

nect with these types ofapps by deleting them, notdownloading them in thefirst place or limiting yourinteraction with them canhelp you rein in yourspending.

SUBSCRIPTION-BASEDAPPSMany subscription serv-

ices and boxes have corre-sponding apps. And youmay feel inclined to signup for a subscription if youcan easily manage yourmembership from an app.But automatic subscrip-

tions are dangerous be-cause consumers tend tocontinue using (and pay-ing for) them, as opposedto canceling when they’redone, says Susan Wein-schenk, a behavioral scien-tist and CEO of The TeamW, a consulting company.

“If it requires action tomake it stop, then we’reless likely to actually takethat action and make itstop,” Weinschenk says.“We all fall prey to in-ertia.”To save, stay away from

subscriptions and theircorresponding apps in thefirst place. Or use apps tofight apps. For example,Weinschenk suggestssetting up alerts to remindyou when a free trial isexpiring – before you’recharged. You can also setup twice yearly alerts as areminder to review all ofyour ongoing subscrip-tions, streaming servicesand so forth.

SHOPPING APPSDeals make people feel

good.When consumer psy-

chologist Kit Yarrow in-terviewed shoppers abouthow they feel when get-ting a good bargain,they’ve likened it to com-ing in first in a race orgetting a raise at their job.“There’s just a winning

feeling,” says Yarrow,

author of “Decoding theNew Consumer Mind:How and Why We Shopand Buy.”Deal-centric apps, such

as those for certain stores,bring those feel-goodbargains straight to youvia your smartphone. Buttempting sale notificationscan encourage more shop-ping, which may mean it’sbetter to delete thoseretail apps altogether.Or at least turn off the

app’s alerts, advises Wein-schenk. That way, youaren’t constantly floodedwith push notificationsabout sales.Another strategy? Wein-

schenk said she’s down-loaded a store’s app, re-deemed a coupon offerand then uninstalled theapp.But if you’re disciplined,

you can keep the apps,says Casey Taylor, a part-ner in Bain & Company’sretail practice. Take ad-vantage of the savingswithin shopping apps, butalso monitor how muchyou’re spending in them.For example, check your

credit card statementsregularly to stay withinyour discretionary spend-ing budget.

SOCIAL MEDIA APPSThe products you see in

your social media feed –whether from retailers orfriends – could encourageyou to purchase things youwouldn’t otherwise buy.But deleting social

media isn’t an option formany. “Most people reallywant to have social mediain their lives, so I can’t seegetting rid of those apps,”Yarrow says.Instead, she says to be

aware that Instagram andFacebook will present youwith buying opportunities.Be conscious that market-ing is constantly targetedat you, and “you’re beinghunted, stalked, chaseddown,” Yarrow says.“When you go shoppingonline, if you stop andhover too long over aproduct, that product’sgoing to show up on yoursocial media feed, and youhave to be ready to sayno.”

Even when you’re notpaying money for theseapps, Yarrow says you’repaying with your attention.

REWARDS APPSRewards program apps,

whether for a grocerystore, airline or coffeeshop, typically function inmuch the same way. Themore customers spend,the more rewards theyunlock.Taylor says it can almost

feel like a game.For example, in the

Starbucks app, “You earnstars that you can thenburn for rewards,” shesays. If you’re a very dis-ciplined customer, youcould save money byclaiming a free coffee orsnack using stars you ac-

cumulated from items youwere already buying, Tay-lor says.But, she adds, “what

you see is it becomes psy-chologically tempting tobuy things just to earnthose stars.”So be careful not to let

climbing the tiers of areward system lead you tospend more in the process.With any app, Yarrow

says one way to curb ex-cess purchases is to simplybe aware of the potentialdangers. Pause and recog-nize your tendency tooverspend before it hap-pens.

Courtney Jespersen:courtney@nerdwallet.com;Twitter: @courtneynerd

Your apps could be promptingunnecessary spendingBY COURTNEY JESPERSENNerdWallet

JAE C. HONG AP file

Changing how you connect with certain apps – bydeleting them, not downloading them in the first place orlimiting your interaction with them – can help you rein inyour spending.

DEBBIE COCKRELL:253-597-8364,dcockrell@thenewstribune.com

HOW TO REACH USFriday 1 year ago

Prime rate 5.25 5.00Federal Target Rate 2.25 2.003-month Treasury bills 2.06 2.026-month Treasury bills 2.02 2.2210-year Treasury notes 1.86 2.9830-year Treasury bonds 2.39 3.12

— BLOOMBERG.COM AND U.S. TREASURY

KEY RATES

Here is what Puget Sound-area banks and thrifts were offering on key consumer-loan and depositinstruments on Friday. All yields are annual.

DEPOSITS MMA:Rates and yields on money-marketaccounts with a balance of $2,500.CD: Fixed rates and yields on one-yearcertificates of deposit of $5,000.IRA: Fixed rates and yields on 18-month ac-

counts.

LOANSAuto: Fixed rate for a $10,000, 60-month,

new-car loan and for a $7,000, 48-month, used-carloan for a 1- to 3-year-old model. Actual ratesmight change with variations from the scenario,and fees and other costs at loan initiation.

DEPOSITS AUTO LOANSInstitution MMA CD IRA New UsedChase 0.01/0.01 0.01/0.01 NO/NO 4.490 5.240Columbia Bank 0.10/0.10 0.07/0.07 0.07/0.07 4.125 4.125HomeStreet Bank - West-ern

1.19/1.20 0.55/0.55 0.60/0.60 NO NO

KeyBank 0.10/0.10 0.15/0.15 NO/NO 3.840 4.490Qualstar C.U. 0.25/0.25 1.29/1.30 1.54/1.55 3.740 3.490Sound Credit Union 0.85/0.85 1.70/1.72 1.95/1.97 4.090 3.790Tapco Credit Union 0.78/0.78 1.40/1.41 NO/NO 3.890 3.740U.S. Bank 0.04/0.04 0.10/0.10 0.15/0.15 6.090 5.790Verity C.U. 0.20/0.20 1.25/1.25 1.29/1.30 4.350 4.200Washington average 0.39/0.39 0.72/0.73 0.93/0.94 4.327 4.358NA: Not available NO: Not offered

Source: Informa Research Services 818-880-8877 Ext. 266**Do not have a bank, thrift or credit union charter; all products are FDIC insured

MONEY RATES

140,000 Social Securitynumbers of our credit cardcustomers (and) about80,000 linked bank ac-count numbers of oursecured credit card cus-tomers.”That’s a pretty big “oth-

er than,” especially thatsecond number. Sincethose accounts are, bydefinition (and WillieSutton), where the moneyis, that data will likelypique the interest of thosewanting to get at it.But, you argue, those

accounts are passwordprotected. Those pass-words reside somewherein the digital world. If thedigital thieves were talent-ed enough to find theaccount numbers (orworse, have some insidehelp) in the first place,would you like to betagainst their ability topenetrate the securitywalls protecting the ac-counts themselves?Assurances that suffi-

cient security protectionsare in place are the digitalequivalent of a Titanic

moment waiting to hap-pen.And it will happen. The

Capital One breach willnot be the last, and thebreaches to come will belarger and involve moresensitive, more potentiallydamaging data about ourfinancial assets.How can we be so cer-

tain? Two reasons.First, the criminal ele-

ment has a work ethic andtalent for innovation thatis the envy of the legiti-mate, law-abiding world.As fast as some technolog-ical device or system isintroduced, the crooks arehard at work devisingways to exploit it.That leads us to the

second reason. Advance-ments in electronic fi-nance and digital paymentsystems are looming. NowFacebook, already awashin lots of data about you,wants to set up its owne-currency, which willmean even more collect-ing of sensitive informa-tion from those who wantto use it, which will lead toeven more concerted ef-forts to steal that informa-tion and the money itrepresents.As individuals we face

some decisions about therisk-reward calculations ofusing these new paymentschemes. If we decideinformation security doesmatter, then that maybecome as much a com-petitive feature in themarketplace as conve-nience and cash-back andairline mileage awards arenow.As a society we face the

same calculations, on amuch broader scale — howmuch do we value a faster,more convenient way ofstoring and using ourmoney vs. what we’respending on losses andsecurity measures.Capital One built a na-

tional credit-card brandthrough the marketing tagline, “What’s in your wal-let?” Since the wallet in-creasingly is digital ratherthan physical, some betterquestions to ask are:Who’s in your wallet?What are they doingthere? And who let themin?

Bill Virgin is editor andpublisher of WashingtonManufacturing Alert andPacific Northwest RailNews. He can be reached atbill.virgin@yahoo.com.

FROM PAGE 1C

VIRGIN

2019, down 11% from itspeak of the first quarter of2017, says commercial realestate broker Cushman &Wakefield.But many analysts be-

lieve they haven’t fallenfar enough. In fact, com-mercial rents in 45 out ofthe 60 cities, includingNew York, Los Angelesand Miami, are higherthan in 2009 when theeconomy was in a reces-sion, according to datafrom CBRE, a commercialreal estate service firm. Inthe case of Barneys NewYork’s Madison Avenuestore, the landlord therereportedly raised its rentto $30 million from $16million earlier this year. ABarneys spokeswomandeclined to comment.Still, flagship stores

aren’t dead. Many retail-ers like Nike and Levi areembracing new versionsthat beckon shoppers withless merchandise andmore high-tech experi-ences.“I don’t think you have

a need for these massivestores,” said Stacey Wi-dlitz, president of SWRetail Advisors. “Shoppersare shopping completelydifferently. You don’tneed a full assortment.They have to become anexperience, letting cus-tomers get to know who

you are versus sellingstuff.”A growing number of

retailers are also thinkingsmaller. Hollister, forinstance, is embracingshrunken stores that offeronline services and serveboth local and touristcustomers.“Our customers contin-

ue to want smaller, moreintimate stores where theycan interact with associ-ates and our smaller proto-types have proven higherproductivity,” Abercrom-bie said in an emailedstatement.Tommy Hilfiger, which

also closed its other U.S.flagships on the swankCollins Avenue in Miami,will be testing smallershops with online inter-action in the U.S. thatcould be more like pop-ups.Caroline Nash, 18 of

Washington, D.C., saysshe finds massive storestoo overwhelming, espe-cially when she can get themerchandise online.“I associate big stores

with long fitting lines andbig crowds,” Nash said.“Unless it is somethingthat offers a differentexperience, I’m not in-terested.”

FROM PAGE 1C

STORES

You can’t use this typeof donation to start orcontribute to a donor-advised fund, but you canuse this strategy to reduceyour taxable income,which may be especiallyimportant if you are nearincome levels where yourMedicare premiums areincreased by crossing anincome threshold.Before you reach age

70½ and the introductionof annual required mini-mum distributions frompre-tax accounts, anotherway to lower the impact offuture taxes and thereforeincrease the money youget to keep or spend is aconversion from a tradi-tional or rollover IRA to a

Roth IRA. Some 401(k)plans, but only a minority,do allow conversions toRoth 401(k). Most peopleinterested in this optionwill have to do it after theyhave rolled over theiremployer retirement ac-count to an IRA.If you assume that to-

day’s relatively low federalincome-tax rates willeventually give way tohigher taxes, acceleratingthe tax due into the cur-rent lower tax rate couldultimately save youmoney. It could also allowgreater compounding ofreturns without the futuretax drag.Regardless of the pos-

sible benefits, many peo-

ple are reluctant to turn afuture tax into a currenttax.This strategy makes the

most sense if you havesome years between whenyou retire and when youbegin to take Social Securi-ty and other pension in-come. This allows you toconvert a portion of yourIRA incrementally over aseries of years before yourrequired minimum dis-tributions from the pre-taxaccounts begin. If youhave enough other savingsavailable to pay the taxdue, you can fill up a rela-tively low tax bracket withRoth conversion dollars.By paying the tax now

and changing the futurecharacter of this money tonot be taxed —neither theprincipal or the growth, foryou or a next generationheir — you may benefitfrom time and compound-ing growth to increase thelongevity of your money.After conversion, be-

cause the money is now ina tax-free growth account,this is where you shouldhold investments with thehighest expected return —generally your most ag-

gressive positions, primar-ily stocks. This may re-quire you to re-positionholdings elsewhere in yourportfolio. Focus on keep-ing income-producinginvestments (bonds andreal estate investmenttrusts, dividend-payingstocks) in the pre-tax ac-count.Apply these strategies

and charitable organiza-tions will thank you (youmay be able to donateeven more than planned ifgiving from pre-tax dol-lars), your heirs will appre-ciate you (for passing ontax-free investments) andyou may increase yourafter-tax returns. Wins allaround.There are some specific

scenarios where theseoptions are not useful, soyou should consult withexperts about your intentand the impact on yourfinancial situation beforeexecuting.

Gary Brooks is a certifiedfinancial planner and thepresident of BHJ WealthAdvisors, a registeredinvestment adviser in GigHarbor.

Tacoma News Tribune file

If you can manage your assets in a more tax-friendly wayafter retirement, you may increase your investmentreturns without taking more risk because you will havemore dollars left to spend in the after-tax world.

FROM PAGE 1C

BROOKS

IF YOU ASSUME THAT TODAY’S RELATIVELYLOW FEDERAL INCOME-TAX RATES WILLEVENTUALLY GIVE WAY TO HIGHER TAXES,ACCELERATING THE TAX DUE INTO THECURRENT LOWER TAX RATE COULDULTIMATELY SAVE YOU MONEY.