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
- Shoe Pavilion
- Ann Taylor
- Piercing Pagoda
- Pep Boys
- Sprint Nextel
- Pacific Sunwear
- Value City
- Steve & Barry’s