Sunday, January 18, 2009

Over-Expansion v. Over-Contraction... A "Short" List of Retailers... Watch List...


Over-expansion v. Over-Contraction.... That is the battle of almost every economic cycle. Below is a list of companies that over-expanded during the previous economic cycle. While I am concerned about the loss of jobs, there is a great opportunity to develop new... efficient... and effective business models for the future. I will admit, that the demise of two companies will not bother me in the least.

Piercing Pagoda: Earrings are one thing... but putting extra holes in eye brows... noses... belly buttons... etc. is something else. Maybe these folks made a bundle of cash in the last trend of punching holes in the human body... but this should be a word of warning that a company can easily die with the trend as well. WWE... Roller Derby... Bungee Jumping...

Video Gallery
: I made my last visit to Video Gallery nearly one month ago. It was a last visit by choice! Over-priced items... and incompetent help put this place on the dinosaur list. As I left, I crossed a Red Box .99 cent rentals... no retail space... no workers... and all credit card transactions. Block Buster will be next... it is not a matter of if, just a matter of when!


FYI................ If you intend to give gift cards around the holidays, you need to be careful that the cards will be honored after the holidays. Stores that are planning to close after Christmas are still selling the cards through the holidays even though the cards will be worthless January 1. There is no law preventing them from doing this. On the contrary, it is referred to as 'Bankruptcy Planning). Below is a partial list of stores that you need to be cautious about.

http://www.snopes.com/politics/business/storeclosings.asp
*All information is deemed but not guaranteed to be accurate as reported by Snopes.com (1)

Watch List...

Look for an up market week. Followed by more horrific news. The issue of transparency will surface sooner rather than later. The Federal Reserve will have a lot of explaining to do if... if... the new administration is truly looking out for the best interests of the American people. I believe companies in general, and banks in particular are becoming "more transparent" only because their toxic assets are surfacing. Like a bad mafia movie, there are some bodies that keep re-surfacing.

SCC Continue to short consumer spending. Un-employment will be in double digits before summer.

EFU Europe will see the EURO re-set at par value with the dollar... ut-oh! Massive cuts from central banks to follow!!! Good bye social state... Hello welfare state.

SRS With a list of retailers closing shop, note that there are not a lot of others
rushing to take their place of place inside malls...

FXI... MCRI... WYNN... CNK...

1. http://www.snopes.com/politics/business/storeclosings.asp

10 comments:

AX said...

I don't know about an up week, just an up day due to the Obamaration. Then we'll see if it's a one day honeymoon...

I'm adding RSH to our watch list.

boom and doom said...

Tiger Coach,
You seem glad that all these stores are closing. This is envitable with all the other problems of the economy, but think of the impact on all the people involved. Think of their mental state. They did nothing wrong. Retail did not over expand, they got caught with the contraction of the economy. Now, they should have been more conservative or considered that expansion would not increase forever. Retail is not the only sector that did not run their businesses prudently. I guess this hits home because I came very close to closing my store, so I know what these people are going through. It is very frustrating, dishearting and a struggle. I'm not against businesses that run into trouble being punished for it, but a lot of these problems are not the making of the retailers. Just remember, because businesses run into trouble does not mean it is always of their own making.

Boom&Doom

AX said...

Boom and Doom, sorry that your business has been affected and I don't think TC is taking pleasure in the closing of stores/subsequent unemployment. But retail in many areas has ridden the coattails of the credit driven economy. This is why Circuit City is going out of business, furniture stores,restaurants that count on warehouse themed space with exorbitant rent. There is way too much overlap in available services/products at similar pricepoints. When the consumer is faced with decreased spending limits, they will choose the lowest priced option even if quality suffers. That, as we've seen, has been a Walmart boon. In the urgent care business we've seen customers try to avoid paying, offering to pay less than the visit, and refusing to come in for followup visits for fear of new payments even at the risk of their own health.....

Tiger Coach said...

There is no joy in any person losing their job... or store closing for that matter. It has a devastating impact on families, work relationships, financial situations, and tax revenue. As a consumer, one part of this blog was to inform others of the potential loss if gift certificate would be purchased at one of the mentioned stores.

I will however, stick to my point about the Piercing Pagoda and Video Gallery being nothing more than trends. A piercing shop rode a trend of putting holes in people's bodies...the more holes the merrier... Seeing kids walk around a high school with 14 earrings... a lip ring... a nose ring and two eye-brow rings is enough to drive that point home!!! "Hey what's wrong with your speech?" "I gut a tung reng."

The Video Gallery is a store to which I have built increased disdain. Not so much that I do like enjoy a video every now and then. But rather, return policies which have scared off customers... This one included. This is part of a cycle similar to tanneries and tack shops which supplied goods to horse riders... or lantern manufacturers who found themselves in a pinch when electricity came out.

As mentioned before, I believe your retail is different in that it offers a tangible product. The products are cool. And it is open to main stream America. It does not disfigure the body, nor specialize in entertainment. Once this financial situation passes... and it will pass; I hope you are able to expand you operation. Maybe even franchise it... I would also like to see you grow a larger internet presence.

You are correct in your assertion that retail is not the only area that is being hit by the economic slow-down. However, it is the most visible.

Last, as an I.O.U.S.A. follower, please check out the outlays of Obama's new budget. You may not be surprised to find the area with the largest allotment.

Hopefully I did not ruffle your feathers.
TC

boom and doom said...

Let's remember that the ease of credit allowed investors, businesses and consumers to become irrational and careless in managing their finances. So while retail may have ridden the coattails of the credit driven economy, they are not the only ones. Now those retailers who misappropriately used credit to expand their businesses will have to pay the price just as consumers and investors are doing. I think retail had over expanded during the good times, but again this is what the Fed, government, etc. wanted. I don't always agree that consumers will choose the low cost option, although it does get harder as they lose their jobs, energy prices increase, etc. Even Wal-Mart has been affected with lower sales by the downturn in the economy. Since our economy is so service oriented, the job losses to come are unimaginable. These job losses have not even begun to see the full impact of a downturn in consumer spending. I agree with the point regarding gift cards. As far as singling out two businesses as having succeeded only because they rode trends is an unfair assessment in my opinion. Spotting trends and servicing them better than your competitors is what retail has always been about. Now if you don't like the trend or the service the retailer gives, that is a different issue. It is not fair to hold them up as poster children for the downturn in the economy. Retailers did not cause these problems. They are affected by the problems. If they over expanded or mismanaged their business through poor product mix, bad pricing, or poor service, then consumers will decide who wins or loses. Those are factors that need to be managed whether in good or bad economies. As far as my business, I am no different than any other retailer who has to make sure they have a good lease, the right products at competitive prices with excellent customer service. Fortunately, I have no debt, generate enough cash flow to fund operations and excellent employees. However, I still had my hand on the plug to pull it out and cease operations. It is really tough to be in retail right now. I guess my bottom line is that it is easy to point out what people or businesses do wrong (I know, I do it way more than I should), but until you understand what it takes to operate and finance a business that you are on the hook for, don't crucify the retailers.

Enough already. Have a good day TC & AX.

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