Thursday, January 22, 2009

Retail Heavyweights Struggle as Financing Customers Elusive

Big and small retailers are closing stores in light of tough economic times and dried up financing. Are we also seeing the end of the "big box" model that sprang up in the 1980's?

Transition creates opportunities for retailers to streamline store front models and tie in advanced local warehouse distribution models (Amazon Prime).

Retail Heavyweight Circuit City to Close All Stores. Circuit City will close their Ann Arbor and Brighton stores along with all 567 US stores and layoff an estimated 30,000 people - add to this work reduction to suppliers that service CC and the impact is even more significant.

Based on my trip to Office Depot yesterday, things are not looking so great there either - inventory levels we low and the store was empty. Recalling back to my retailing days in the 80's and 90's this is not too untypical of January as stores shift seasons, and inventories hit their annual lows anyway - but I have to wonder if the Ann Arbor Office Depot is one of 112 announced store closings.

Steve and Berry's - bought in November by Bay Harbour Mangement for $168 millian. Complete liquidation of 173 remaining stores announced on Nov. 30 2008.

There is a long list of other national players that are scaling back or closing all together.

No doubt the "big box" book business wil contract soon in Ann Arbor as well. With 3 Borders and one Barnes and Noble book stores, it seems highly unlikely that all will make it through this downturn.

This changing retail landscape is a result of the implosion of the the hyper financed retail boom where stores were opened mindlessly to hit planned goals and spend the budget but also a result of changing buying and distribution patterns brought on by Internet commerce. I am looking forward to a changed landscape for retailing - but wondering what we are going to do with all these boxes!

Image courtesy Filckr F33's photostream

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