With Little Retail Industry Stimulation in the Stimulus Package, U.S. Retailers Create Their Own Bailout and Manage Their Own Recovery
Thursday February 26, 2009
The U.S. retail industry is not getting much direct stimulation from the economic stimulus package. This leaves the burden of a retail recession bailout resting squarely on the shoulders of the individual retail companies. While they may whine a little bit about getting left off the bailout guest list, most retailers know that a meaningful long-term recovery can’t work any other way.
Even though retail sales figures are viewed as one of the major diagnostics to measure the health of the U.S. economy, the maladies in the retail industry are at the effect of the overall economy, not one of the causes. At this point, pumping money directly from the government to the retail industry would be like using a really big band-aid to heal the broken tibia bone protruding through your shin. It wouldn’t look as ugly, but you would be painfully aware that the real problem hadn’t been fixed.
Charged with the responsibility for their own self-healing, the retail industry is left asking how bad their condition really is, and what can be done about it. It’s important for individual retailers to look objectively at their malady and not succumb to unfounded fears that will paralyze them in their own recovery efforts.
Considering that manufacturing lost 207,000 jobs in January, the 45,000 retail layoffs in the same month don’t seem so life-threatening. Considering that unemployment has risen 2.7% in the past year, the 2.8% decline in holiday sales seems like a normal and reasonable reaction.
Consider the unexpectedly positive retail sales reports we’ve been getting lately. The latest is from the International Council of Shopping Centers (ICSC) and Goldman Sachs Retail Chain Store Sales Index. It reports that week-over-week retail sales increased 0.6% for the week ending February 21. Admittedly, one week and six-tenths of one percent don’t seem like enough to make anyone break into a happy dance.
Consider, though, that Valentine’s obligations had already been fulfilled, and President’s Day auto leases had already been signed, and still retailers saw a sales increase. Considering that, any plus sign looks a little more positive. When you also consider that the week-over-week sales figures from that ICSC long-named index haven’t seen a minus sign in four consecutive weeks, it seems as if the condition of the retail industry has stabilized, no matter how temporarily.
Even if conditions aren’t as bad as the 2009 prognoses predicted, retailers still need to keep themselves off the Chapter 11 bankruptcy list until the medicinal benefits of the economic stimulus start to take effect and trickle into their cash registers. Profiting in a recession may be antithetical, but it’s not completely impossible. You don’t have to be Wal-Mart to have a plus sign in front of your monthly sales numbers. But retailers will need to make sure that their offers are relevant, their browsers are converted to buyers, and the sloppiness is cleaned out of every aspect of their business and relationships.
All things considered, the retail industry may be ailing overall, but the diagnosis for individual retailers is not necessarily terminal.
Even though retail sales figures are viewed as one of the major diagnostics to measure the health of the U.S. economy, the maladies in the retail industry are at the effect of the overall economy, not one of the causes. At this point, pumping money directly from the government to the retail industry would be like using a really big band-aid to heal the broken tibia bone protruding through your shin. It wouldn’t look as ugly, but you would be painfully aware that the real problem hadn’t been fixed.
Charged with the responsibility for their own self-healing, the retail industry is left asking how bad their condition really is, and what can be done about it. It’s important for individual retailers to look objectively at their malady and not succumb to unfounded fears that will paralyze them in their own recovery efforts.
Considering that manufacturing lost 207,000 jobs in January, the 45,000 retail layoffs in the same month don’t seem so life-threatening. Considering that unemployment has risen 2.7% in the past year, the 2.8% decline in holiday sales seems like a normal and reasonable reaction.
Consider the unexpectedly positive retail sales reports we’ve been getting lately. The latest is from the International Council of Shopping Centers (ICSC) and Goldman Sachs Retail Chain Store Sales Index. It reports that week-over-week retail sales increased 0.6% for the week ending February 21. Admittedly, one week and six-tenths of one percent don’t seem like enough to make anyone break into a happy dance.
Consider, though, that Valentine’s obligations had already been fulfilled, and President’s Day auto leases had already been signed, and still retailers saw a sales increase. Considering that, any plus sign looks a little more positive. When you also consider that the week-over-week sales figures from that ICSC long-named index haven’t seen a minus sign in four consecutive weeks, it seems as if the condition of the retail industry has stabilized, no matter how temporarily.
Even if conditions aren’t as bad as the 2009 prognoses predicted, retailers still need to keep themselves off the Chapter 11 bankruptcy list until the medicinal benefits of the economic stimulus start to take effect and trickle into their cash registers. Profiting in a recession may be antithetical, but it’s not completely impossible. You don’t have to be Wal-Mart to have a plus sign in front of your monthly sales numbers. But retailers will need to make sure that their offers are relevant, their browsers are converted to buyers, and the sloppiness is cleaned out of every aspect of their business and relationships.
All things considered, the retail industry may be ailing overall, but the diagnosis for individual retailers is not necessarily terminal.
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