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Keep in mind that retail needs an urgent bailout.
Late autumn and early winter sales statistics, (and that includes actual profit margins after
costs are deducted from sales not simply panic sell off of severely discounted or very low margin
items to create volume of sales without profits), are what keep the retail sector alive
during the dismal after Boxing Day mid to late winter traditional slump. Total dollars of sales
are not a reliable or meaningful statistic. You can sell billions of dollars in goods, but lose your
shirt in the process, if margins are nonexistent on the bottom line. Bottom line visibility is not
one of the immediate economic indicator that it should be. Consumer spend, in total dollars,
is what politicians tend to measure the economy on. That is, in this crisis, very misleading.
Unfortunately the bottom line numbers do not tend to get published into public view, in the
month that they occur. Often they are severely delayed and usually fairly obscure numbers.
Without solid revenues in November and December, coming into January means total disaster,
with no hope for many to meet their fiscal obligations to get through the traditional slump.
Those stuck with excess inventory, and having to sell off at below cost, simply to reduce debt,
are in even worse shape to weather through the latter part of January and most of February and
March. This is even more true of the mom and pop shop, the small entrepreneur, the independent
business, or loosely affiliated franchisee or owner in a group of independent merchants. Many a
franchise, though providing services to franchisees (that they must pay for regardless of their
current revenue situation), is largely an independent entity relying on its own sales revenue for
its survival, quite apart from the brand name on the chain as a whole. Unfortunately a franchise
is often more constrained as to business practices, and while this works well enough in good or
average times, when tough times hit, the franchise can find itself hog tied to practices that are
expensive and inadequate in terms of the changed situation.
In many parts of the country the winter slump also means the highest costs for heating,
which adds to the cost of keeping retail doors open. There are fixed costs for energy, rent or
lease payments for premises and sometimes equipment, inventory carrying costs, and
necessary maintenance. Even cutting costs to the bare bones, leaves significant bills to pay,
and the typical "mom and pop" enterprise is at best a courageous effort, but in tough times
it becomes an unjust form of struggle. Nevertheless many are dependent for their incomes
on exactly that.
One of the increasing dangers of the rise of the electronic mall, and internet shopping, has been
the destructive impact upon society of a desocialized, depersonalized mode of commerce. In the
past the social element, personalized connection with the long time owners, who were more
friends than simply proprietors of a business, was at the core of North American life. The electronic
mall has eroded that vital institution, and continues to cause immense, perhaps irreparable damage
to society. In some significant instances personalized, social, shopping was one of the main forms
of social connection, for many people. Without that society itself becomes increasingly dysfunctional
and unable to replace that element within society with any suitable and effective alternative.
The economic downturn further threatens that same institution, along with the effect of large
high pressure, high volume, discounters and superstores, where shopping sometimes offers some
fiscal advantage, but is otherwise far from being a pleasant experience, socially and psychologically.
Those megastores cannot meet the same needs. Not to mention that they exist on relatively small
margins supported only by their more massive buying power. Nevertheless, the megastores cannot
replace the institution of "mom and pop" enterprises, of family run businesses, where social
and personal connection were at the core of commercial transactions.
Without government intervention we can anticipate near total destruction of that vital social
element, which has been a valued and valuable social institution at the core of North American life.
When even the megastores are in a condition of economic adversity, unable to make margins
sufficient to keep open the doors, mom and pop rarely stand any chance at all. The family business,
and thus the American dream of "free enterprise" and entrepreneurship is threatened with becoming
as dead as the dodo, an extinct species, and merely a historical artifact with no more practical
relevance to the changing economic scene. Can society afford that loss ? I would say no, it cannot.
The sociological and psychological impact of that loss would be too devastating, and the long term
political damage would be irreparable.
Government will have to step in to help the retail sector survive this one.
Right now there is no other way.
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