Luxuries, big and small, are the first to go in a tight financial climate. Credit dries, splurges dwindle, the wealthy tighten the reigns and businesses reliant on superfluous spending begin to face significant challenges. We’ve watched this trend, waiting anxiously for the light to pierce the tunnel and despite Bernanke’s claim that the recession is over, it’s clear that recovery is still a long way off.
The latest reports from retailers who previously served as industry benchmarks are a somber reminder of the state of things. Starbucks is losing 43 kiosks that were located inside northeastern Stop & Shop and Giant grocery stores due to under performance. On the other hand, fast-food has gotten competative with McDonald’s, Wendy’s and Burger King all vying for the attention of the newly frugal.
Barney’s, the 86 year-old high end department store, may be back on the market. According to Bloomberg, the retailer was acquired by a Dubai government-owned firm in 2007 and is now being eyed by Canada’s largest grocer. Debt and declining sales are pushing the company towards bankruptcy. Sak’s and Neiman’s have similarly struggled in recent months. Meanwhile, JC Penny’s invaded Manhattan and Sears is retooling the sales floor.
Here’s the question. Are the days of rapid and massive growth over? Is that good news?? While consumers are becoming conservative savers, should retailers practice the same behavior? If so, how do they compete with middle market rivals who have been waiting for their big comeback?
2 Comments
GROWTH is less of an immediate concern than SHAKEOUT, in my opinion. I am wondering how any and all sectors of the retail market (as a whole) will be re-structured or will this be a recycling of the same players under new ownership? How long can we buy and sell the same players to re-package and re-sell? So my key question is…
Where have all the INNOVATORS gone? Where have all the audacious and bold risk-takers gone? The time is ripe… speak now or forever hold the memory of opportunities passed-by and thoughts of what could have been.
E-mail me at Nick.Johnson@millerzell.com if you have a retail idea that you believe is an opportunity to shape the future of our industry
You make a good point, Nick. We talk a lot about product innovation in American business but we forget about other ways to bring freshness to the marketplace. When things were good people were looking for the next big thing to invest in. However, now that investment funds have dried up I think we’ll see a lot less product innovation from the young and the enterprising.
I think what we’ll see in terms of new ideas will come in the form of the way retailers interact with shoppers. And…I bet, it will be a lot more cost effective for those companies to invest in innovative marketing , such as shopper marketing, in-store experience and second life, versus the costs associated with R&D of new products.