React To Overreact

On February 3, 2009. By Fran, under Industry News.

The constant wave of economic instability has push retailers into a world wind of store closings, employee downsizing and corporate cut backs. Marked as the second “depression” our country has seen since 1929 with holiday retail sales hitting and all time low since 1969, has the hype caused reaction to make change or overreaction, jumping ship prematurely.

Companies like KB Toys Inc. couldn’t make it through the Christmas season, and many more are expected to file for bankruptcy in the coming months. Circuit City Stores Inc., which filed for Chapter 11 bankruptcy in November, said Friday it will go out of business, closing its 567 U.S. stores. Felines Basement has just announced closings slated for February.

For the last two years, many of the best-run nation’s stores like J.C. Penney Co. had been reducing inventories in response to the consumer spending slowdown. JCrew also planned in advance by cutting down novelty color palettes of garments and focused on basics, what sells and what does not work. The Gap, Neiman Marcus also has also revamped merchandise buying, keeping stock higher on staple items rather than impulse trend merchandise.

“Before cutting, closing and hanging the sign on the front door, we are navigating new territory, predicting that the fundamental shift by consumers to spend less and save more will linger.” – Retail Insider

Overreaction to close up shop might be just poor business direction in some cases. Did Circuit City, KB Toys and so many others hit by the economic tsunami plan far in advance to brave out the coming aftermath?

The good news for shoppers, will find less cluttered stores and merchandise at lower price points. From ordinary groceries and household products to brands and apparel they could only once aspire to have, will become a close reality.

The upsides if there could be any, consumers will find stores less cluttered and see an array of products at lower prices, from ordinary groceries to jeans from brands they could once only aspire to.

The sudden reaction of Macy’s cutting seven thousand jobs to stay afloat is unfortunate. A crisis such as this economic downslide offers only two suggestions. React, cutting staff, offering discounts, reducing unpopular merchandise and keeping a firm hold over a very unwavering time.

The other choice, to overreact, shutting down locations, filing bankrupt, liquidating factories might be too late for some who should have reacted rather before then overreact when it was too late to keep heads above water.

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