You have to be older than me to remember Shopper’s Fair. That was the first store that, back in the early 1960’s, was going to put my grandfather out of business. They were gone before I was old enough to spend my first dime. I do, however, have memories of Woolworth’s downtown and Montgomery Ward at Westwood Mall. I remember walking through Montgomery Ward, marveling at how big the store seemed. (I hadn’t yet been to Macy’s in Manhattan.)
Shopper’s Fair, Woolworth’s and Montgomery Ward are gone. Each because of their own individual circumstances. Here is a list going around the Internet these days of current closures and stores struggling in retail.
Businesses often cite a variety of reasons for closing:
- Poor Economy
- Changes in Industry
- Unfair Retail Landscape Slanted Against Them
The reality is that most closures happen because of a Lack of Cash Flow.
When the money quits coming in, the stores don’t have the money to pay the bills, don’t have the money to replenish the shelves, don’t have the money to invest in technology, upgrade the infrastructure, or train the employees. Lack of cash starts a downward spiral that is hard to escape.
More often than not, that Lack of Cash Flow happens because of Bad Management. Bad management of:
- Employees—no training on how to relate to today’s customers, build the relationships that matter, and make the sale
- Inventory—old merchandise, too much merchandise, too little merchandise, the wrong merchandise
- Change—not adapting quickly enough to the changes in the industry (All industries change. Some disappear. There is a distinction.)
- Goals and Vision—not having a clear view of where you want to be today and where you are going tomorrow
Many stores have found ways to thrive in an unfair retail landscape slanted against them. Many stores have found ways to navigate the changes in their industry and customer base. Many stores have found ways to thrive (or at least survive) in poor economies.
Bob Phibbs, aka The Retail Doctor, posted an amazing blog about the experience (or lack thereof) in music stores today that addresses the first bullet point above. As a singer and mediocre guitar player, I can relate to everything in his post. This is a problem abundant in retail right now, and one that can be easily addressed. Amazon isn’t winning customers so much as brick & mortar stores are losing customers. Go read it right now.
It will be the best thing you read this month.
Overall, retail is growing. The stores in the meme above are losing market share to their competitors because management hasn’t trained them well, positioned them well, or managed their resources well.
Is the Retail Apocalypse upon us? I don’t think so. Stores open. Stores close. Just ask Shopper’s Fair, Woolworth’s and Montgomery Ward.
PS I have seen the above meme used by the left to lay the blame for these closures at President Trump’s feet in much the same way many on the right tried to hang everything bad around President Obama’s neck for eight years. I have news for you. None of these closures are because of who is president or what the president has done. They would have happened under Hillary Clinton, Bernie Sanders, you, or me.
PPS Yes, my store was a victim of cash flow problems. Our market share didn’t change, but our local market did. Because of shrinkage in population, household income, and the average money spent on toys, our market in 2016 was only 53% of what it was in 2007. Our store was too big for our economy. We could have shrunk it down to fit, but we wouldn’t have been the store you remembered. We chose to close instead (a choice discussed in the boardrooms of every one of those companies listed above). With Toys R Us closing, many have asked if I will reopen. Unfortunately, the market hasn’t improved enough to justify reopening.