There is too much retail selling space chasing too little sales demand. This space requires working capital (inventory), payroll expense to cover the space, and drives excessive markdowns to clear the inventory. Most national chains have anywhere from 10-30% of their locations operating at a net loss. Here are some examples of retailers facing the situation and taking steps to address it. Read More
Retailers, more than most, tend to focus on next week, next month, and, on rare occasion, next season. This is the nature of the business. The risk, however, is that major shifts in the retail environment can happen unnoticed and major opportunities can go by uncaptured. There is such a shift underway today and most retailers are not focused on it in a thoughtful, tangible way. That shift is the rapidly growing importance of the Latino population on the retail marketplace.
Earlier posts here have discussed the glut of retail selling space in America. The big box stores in particular, with their cavernous space, large inventories, and associate headcount are particularly stressed as they adjust to the "new normal" of lower aggregate demand caused by chronically high unemployment and the ongoing reduction in consumer debt loads. As I've asked before - what's going to happen to all this space?
For three decades, retail selling square footage grew much faster than the population. The financial collapse of 2008 brought about a sharp reduction in consumer spending, which brought this extraordinary imbalance into stark relief. Returning to a supply/demand equilibrium brought on a wave of retail closings that produced huge amounts of empty retail space at very attractive prices.
Many major retailers are in the midst of or have already launched initiatives to "localize" assortments. What, exactly, does localization mean and what are the key elements to success?
