It isn’t the shift in consumer spending alone that is to blame for such a devastating scope of closures. If you consider that most of these retailers accumulate staggering amounts of debt and use credit as their means of cash flow, many of them are unable to handle the tightened purse strings and higher rates of interest that lenders are enforcing. Combined with lessened consumer spending (who is going to buy that new sofa when you need the money for your increased mortgage/credit card/fuel costs), they have little choice but to close doors. Up to 7000 closed doors projected for 2008. Mind-boggling.
Other experts believe that this is a simple economic readjustment…that there are, in fact, too many retail operations per capita. I do like this theory, because as a consumer, I often feel that there are too many choices…so many that I can’t make a decision on what to buy. As a result, I’m likely to delay my purchase…deadly for retailers, who rely on quick consumer decisions to close a sale. Survival of the fittest. We’ve got a tough year ahead on the economic front.
PS. Cost me $90 to fill my tank yesterday. Which meant only one pair of Old Navy jeans for my daughter instead of the two pair I’d been planning to buy. And dinner at home instead of out at a restaurant. And a DirecTV movie instead of Blockbuster rental. And…and…and.