| WASHINGTON MUST BAILOUT RETAIL SECTOR |
http://groups.google.com |
| Robert Morpheal, Bob Ezergailis, Morphealism (morpheal@yahoo.com) |
2008/12/09 08:43 |
WASHINGTON MUST BAILOUT RETAIL SECTOR
Keep in mind that retail needs an urgent bailout. They are not as big
as GM, Ford and
Chrysler. Most are far from being large corporations. Many are one
person enterprises, or mom and pop shops, with family helping keep the
business going. They do not have the resources of GM, Chrysler, Ford,
to go to Washington to petition government for help, but they need
help even more than GM, Ford, or Chrysler.
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.
No one will forgive a government that bails out large corporations
while mom and pop shops across the nation perish, and forever close
their doors. The government that does that will invoke a curse second
to none in all of economic history.
Government will have to step in to help the retail sector survive this
one.
Right now there is no other way.
Robert Morpheal
This article may be copied, distributed, reproduced by any means, in
any way, anywhere, and in fact anyone is encouraged to do so.
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