The drunken party is over, now it’s time for the hangover, and for some, a couple of cups of coffee might not be available anyway. Starbucks, the former darling of Wall Street, is closing up to 600 stores. [UPDATE: STARBUCKS PLANS TO CUT AN ADDITIONAL 1,000 HOME OFFICE STAFF] Circuit City, Linens ‘N Things, The Sharper Image, and Mervyn’s stores have also been thrown out of the bar. Clothing retailer Goody’s is shuttering several hundred stores, and a recent report in Forbes (the link doesn’t want to work so here’s the URL: http://www.forbes.com/2009/01/20/retail-bankruptcy-economy-biz-commerce-cx_tvr_0120closings_slide.html?thisSpeed=15000) highlights a boatload of retailers that are struggling. Most are examining their income statements and balance sheets, realizing that they operated on the premise that the good times never end. That’s a fatal strategy.
One-third of U.S. women recently surveyed by America’s Research Group said they plan NO clothing purchases–NONE–in 2009. Normally, it’s just 4%. That means the market is still far too saturated with stores.
Recessions have been fairly predictable
We experienced recessions in 2001, 1990, 1981, and 1973. It looks like we get one every 8 or 10 years, like it or not. So why can the executives at these companies not see that we have a relatively consistent business cycle? Shouldn’t they use some common sense and prepare?
What can we learn from their mistakes?
If you learned that your income would drop 50% once every 10 years, how would YOU prepare? What preparations would you implement? Well, consider yourself forewarned! We will probably have another recession between 2017 and 2020 — regardless of what the Federal Reserve does, regardless of who’s the President, regardless of who’s in Congress, regardless of who won American Idol season 19.
Dig your well before you’re thirsty!
Time is the best way to get through a hangover and the best way for us to get through the recession is PATIENCE. Couple that with massive debt reduction, a pumped up saving account, and personal frugality, and we might have the recession hangover cure!
In the meantime, if you’re holding a gift card from one of these retailers, it might be a good idea to go ahead and use it now. Here’s the list (sounds like the average mall minus the anchor stores):
- Eddie Bauer
- Lane Bryant
- Fashion Bug
- Catherine’s
- Shoe Pavilion
- Goody’s
- Timberland
- Ann Taylor
- Zales
- Piercing Pagoda
- Pep Boys
- Sprint Nextel
- Starbucks
- Pacific Sunwear
- Gap
- Tweeter
- Value City
- Steve & Barry’s
- Boscovs
{ 8 comments }
I won’t miss any of them. I’ve only been in a Pep Boys, and that’s about once every three years.
Admin 's reply:
January 25th, 2009
I don’t go to most, but I have been known to frequent Starbucks quite often. Love my quad grande ristretto extra hot breve lattes (wink)
Shopped a little at Steve and Barry’s but when they abandoned their niche and started selling stuff for ever increasing prices (plus their clothing ran way small), I wasn’t surprised to see them go out.
Goody’s closed here last year.
As far as the rest, except for GAP, I don’t go to them.
And I only went there for the grand kids. They had some good prices…at times.
Sorry to see all of them close. But this should be expected, with the downturn in the market.
And, as far as shopping. How much more can I fit into my closet?
I venture to say ……. NOTHING! Ouch….did I really say that????
Oh well….;-)
God bless America!!!
LP
I did a double take on the”tweeter”, I was like “Twitter!!” hahaha. My fianceè flinched on Lane Bryant and Zales….
What is going to fill in all the empty real estate? Turns out there *is* something uglier than a brand new strip mall: an empty strip mall.
Meanwhile, I’ve been shopping *more* in the last few months than I have in years. Desperate stores offering 75 and 80 percent off are spoiling me for life…
Admin 's reply:
January 25th, 2009
That’s a great question. We will probably fill them full of government offices. Gotta spend those trillions somewhere …
Start-Up 's reply:
January 28th, 2009
They’ll fill them with tax collection agencies to collect all those new taxes that have to start rolling in to pay for all this government spending. I’m sure they’ll fill up once the economy recovers, they always do.
Sara has a good point. We’ve had stores vacating where I live for a few years now, leaving many empty storefronts, it’s an eyesore and terrible for our local, struggling businesses.
Re: If you learned that your income would drop 50%….
Good point. I’m going to keep that one in mind for all time, since the economy always has high’s and low’s.
Ron, I’m surprised to see that you posted this without really vetting it. http://www.snopes.com/politics/business/storeclosings.asp
I’m an employee at one of those companies, in the treasury department… handling all of the day to day cash flow… and we aren’t doing as poorly as Forbes and the forwarded e-mails would have you believe.
Yes, some of those stores have already filed for bankruptcy, but quite a few aren’t doing as poorly as this leads you to believe. In fact, by you posting stuff like this it hurts and discourages sales from some of the companies that would otherwise need them.
-Daniel
Admin 's reply:
January 27th, 2009
Vetted. Now that’s an overused word this year. I bet our new President wished he had “vetted” some of his appointments a little better … but I digress.
My source was Forbes magazine, not emails. I never received an email. What specifically wasn’t true in the post or in the Forbes article? The post dealt with stores that are closing, not cash flow. I’d be willing to bet the employees that worked at the closed stores wish some of that daily cash flow was still coming to them in the form of a paycheck.
Charming Shoppes (Lane Bryant, Fashion Bug, Catherines) closed 150 stores in 2008 (Matches the number on Snopes!) and plan to close 100 more in 2009.
Eddie Bauer closed 29 stores in 2008 (8% of all stores). Matches the number on Snopes!
Timberland closed 40 stores in 2008 (16% of all stores). Not mentioned on Snopes.
Ann Taylor closed 60 stores in 2008 (6%) and plans to close another 57. Matches the number on Snopes!
Zales/Piercing Pagoda closed 105 stores in 2008. Analysts predict Zales won’t make it. Matches the number on Snopes!
Pep Boys closed 33 stores in 2007 but they’re in poor shape according to Forbes analysts. Snopes claimed it was 31. Personally, when it comes to business, I’ll accept Forbes over Snopes.
Sprint Nextel closed 125 locations in 2008 (9%) and according to the article, probably need to close more. Matches the number on Snopes!
Starbucks closed 600 stores (several near me!) and plan to lay off another 1,000. Not mentioned on Snopes.
Tweeter threatened to start dishonoring gift cards but a pack of state’s attorney generals somehow “convinced” them to continue honoring them until the end of the year or until its stores close. No mention on Snopes.
PacSun closed 74 stores in 2007 and 153 demonstration stores (16%) in 2008. Matches the number on Snopes!
GAP closed 85 stores in 2008. According to Snopes, they can’t decide if they’re closing stores or opening them.
Which one of these isn’t true? Looks pretty well “vetted” to me.
I’m relatively certain that my post didn’t hurt any of these retailers and didn’t drive any sales away. If I had that kind of power, I’d be pretty jazzed!
I’m going to miss circuit city. I know they’ve been best buy’s ugly step daughter for a few years now, but they always had great deals if you paid attention.
If I were a retail chain or a small business owner I would try to save some earnings when times are good so that downturns in the economy don’t put me out of business. Although that’s much easier to say than to do.
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