Saturday, January 19, 2013

Changes are A-Comin'

By now, everyone has heard the economists' report that many U.S. businesses had a dismal holiday season with earnings far less than anticipated. Can that really be a surprise? Most people remain cautious about spending money they don't have or running up their credit cards.

All the hyping in the world can't make customers spend if they can't afford it. There are exceptions to this spending pattern, of course. Some parents and grandparents can't deprive little Sam or Susie of getting their expected Christmas treasures. But most of us realize that foolishness in holiday spending is just that -- foolish.

Each year investment pundits issue a short list of companies which may not survive the coming year, organizations which are either over-extended, under-funded or obsolete. I had to read this year's predictions though I could already name several candidates based on news reports. No doubt some of those establishments named will succumb in the near future, if not during 2013. The times are a-changing and some companies just don't seem to get it.

There is probably plenty of blame to go around as to the reason. The economy has impacted everyone. If I owned a brick-and-mortar business, I would be concerned, too. Their costs must be horrendous. If you consider real estate costs combined with construction and maintenance of buildings, employee costs, utilities, taxes… it's quite a challenge.

A business may have a storied reputation, offer an inviting environment and feature a fine assortment of merchandise and still be unable to keep the doors open. Recently I was browsing a Wikipedia list of "business failures" and was bowled over by some of the businesses who have closed their doors since 2000. (The list below was compiled from Wikipedia. Some of those listed may have morphed into another entity with a different type of structure. Nonetheless, I am including those entities here.) Hold on to your hats!

The Equitable Life Assurance Society
Bethlehem Steel
Capital Artists
Montgomery Ward
Polaroid Corporation
Sunbeam Products
Trans World Airlines
Arthur Andersen
Tower Records
Bombay Company
Music Zone
Circuit City
Lehman Brothers
Levitz Furniture
Lillian Vernon
Linens 'n Things
Olan Mills
The Sharper Image
Wilsons Leather
CIT Group
Crabtree & Evelyn
KB Toys
Ritz Camera Centers
Steve & Barry's
Waterford Wedgewood
Blockbuster, Inc.
Hollywood Video

This entire list is vastly longer. I chose to include businesses with which may consumers may be familiar. You might want to read the entire list for yourself. It's amazing.

Common thread? I failed to see one. But recently I was shopping in a local business which is doing extremely well. This is a franchised establishment with a national reputation and I shop there often. Just days before, a news story appeared about a competitor of this business which has a dismal future. I asked the clerk why their business was thriving while the competitor is not doing well. The clerk shrugged and said, "They aren't keeping up. They think they can continue on as they always have."

That might be the answer.

Updated techniques and online coupons might make the difference to merchants. When all else fails and the consumer is looking for a product, there is always online shopping. Merchants need to keep in tune with the consumer's needs

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