The annual ritual of thinning the herd of small businesses; it is a good thing!
Just after our January newsletter was sent to you, the annual announcement of business closings was made by all the various guilty parties. I say guilty because they are guilty by not remaining relevant to their target customer. (That is if they knew who their target customer was)
Macy's announced 68 closings. Sears/K-Mart announced 150 closings. Others with closings of locations in excess of 100 include Aeropostale, Chicos, Children's Place, Office Depot, Jos. A Banks and even Wal-Mart.
Some of you who have written to ask for comments have expressed concern and viewpoints that this is a sign of the drones of Amazon taking over retail.
We see it differently as the headline states. Let us add a couple of facts to why we see it as good news. In the United States there exists 50 square feet of retail space for each individual. That is a lot of space and it looks even better when you consider those who cannot shop for themselves be they infants or elderly.
By contrast, in Europe there is only 2.5 (that is two and one-half) square feet of retail space for each individual. While we do not know if the Europeans have it right, we can definitely say that the USA has too much.
As an example, in our city of 250,000 the one Sears, located in the mall is closing. Already announced to take all of that space is a sporting goods retailer. Walking distance to this mall is the empty space that was once a Sports Authority - a retailer that has closed all of their stores.
Our point is that the only thing more stores creates is fewer sales per square foot. Next month we are going to discuss that drone from Amazon, but for now I think the thinning of the herd is beneficial to those businesses who have correctly identified their target customer. |