I never intended to be a political or economic commentator....but 7000 retail outlets going bye-bye? I gotta say something!
Posted Jul 07 2008 7:14pm
A very long headline for a lot of economic downturn. Egad. Waking up yesterday toNPR again depressed the bejeebies out of me. I think I'm going to have to change back to ocean sounds. Here's the deal. Last year, that terrible economic year (the one where most of us lost 10% of our investment portfolios) over 4500 retail outlets closed up. This coming year, the projection is for 7000 retail outlets to do the same. That's a heck of a big number. Who is being hit?An article in the NY Timesin mid-April gave a prelimary look at just a few who are going to (or already have) shut down.
Bombay Levitz Sharper Image Linens'n'things Footlocker Ann Taylor Zales Wickes
It isn't the shift in consumer spending alone that is to blame for such a devastating scope of closures. If you consider that most of these retailers accumulate staggering amounts of debt and use credit as their means of cash flow, many of them are unable to handle the tightened purse strings and higher rates of interest that lenders are enforcing. Combined with lessened consumer spending (who is going to buy that new sofa when you need the money for your increased mortgage/credit card/fuel costs), they have little choice but to close doors. Up to 7000 closed doors projected for 2008. Mind-boggling.
Other experts believe that this is a simple economic readjustment...that there are, in fact, too many retail operations per capita. I do like this theory, because as a consumer, I often feel that there are too many choices...so many that I can't make a decision on what to buy. As a result, I'm likely to delay my purchase...deadly for retailers, who rely on quick consumer decisions to close a sale. Survival of the fittest. We've got a tough year ahead on the economic front.
PS. Cost me $90 to fill my tank yesterday. Which meant only one pair of Old Navy jeans for my daughter instead of the two pair I'd been planning to buy. And dinner at home instead of out at a restaurant. And a DirecTV movie instead of Blockbuster rental. And...and...and.
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