Posts Tagged: retail stores closing

Just In Time inventory showing its weakness

I stopped by Walmart in my local area on a whim to check for ammo and I wasn’t surprised to find nothing more than shotgun shells and odd-calibre stuff.  An employee stopped my to ask if I needed help and we began talking about the ammo and shortages everyone seems to be experiencing.  The employee went further and told me about how they hadn’t even had a truck arrive the day before and how is caused all kinds of problems for the store and then pointed to the shelves and explained that while there was still much on the shelves, many of the common items had been spread around to take up empty space, while others were just plain out.

I thanked the employee for his time and took a stroll around the store to see this for myself, the guy was right, the shelves were spare or compeltely bare of some items.  Things that I noticed as being the most affected was ammo (of course), snacks items, beverages, food staples, frozen items, household (soap, laundry detergent, etc), stationary, and writing supplies.  I didn’t check the hygeine and personal care isles, nor did walk through the medication section.  A lot of this all fits into the catagory of common every day items we use.

What does all this mean?  regarding ammo, demand has been up for sometime and I wasn’t surprised to find little available.  As to the rest I’ll go out on a limb and assume for the sake of my argument that demand has remained steady.  So what’s the deal?  Well, it all comes down to supply and how that supply gets to stores to be sold.  If you remember Greg’s article about the Baltic Dry index, you’ll remember that shipping rates have essentially dropped to zero which caused large numbers of ships to be parked, This is because trade is down–no one is shipping anything.

All that brings me to my last point, Just-In-Time or JIT shipping.  The link can explain JIT better than I, but essentially it’s an inventory business model that brings goods to a store just as it’s needed, hence the terms Just-In-Time.  This system is all and good until you disrupt any part of the system.  A disruption in supply, demand, transport, anything will result is a rippling effect that can have far reaching results depending on the specific disruption.

Why do I prep?  The supplies that I need can very easily, in the space of hours, become unavailble.  It may be a minor inconveinence until supply is disrupted or transport is disrupted for anylength of time.  Demand skyrockets, prices skyrockets, people become desperate, desperate people do desperate things.

Right now we are seeing the ripples started months ago buy a drop of in trade (transport) because of a drop off in supply, and a decrease (world wide) demand.  Now things are becoming scarcer, it subtle now, but can easily and quicly become more pronounced.

Empty containers clog South Korean Port; Container ships sit idle; Idle container fleet grows.

Mike@prepcast.info

Unemployment to Increase Dramatically with Retail Closings

Retail stores are the end result of a long line of commerce. Those items you buy at the mall aren’t made locally. Raw materials are formed into base product, which is shipped to factories to be be fabricated into parts, which are shipped to a final assembly plant. Not every product takes this path, but you get the idea.

Every time you buy a pair of shoes, you keep a lot of people in a job. When people spend less money, the retail shops can’t stay open because they’re not making enough money. Not only do the people who are working at the retail stores lose their jobs, but so do some of the people that work at the manufacturing plants.

Why are people spending less? Lost jobs and higher mortgages are big reasons (not to mention insurmountable debt). It’s a vicious circle, though. Enough people spend less and a few companies need to make employment cuts. Now these people are out of work and rapidly cut back on spending. If these people can’t find other income, they continue to buy less stuff and companies cut back a little more. Eventually, the lack of spending causes entire companies to go out of business, making their entire workforce out jobless.

This is a somewhat simplistic synopsis of what’s happening, but it gets the point across. As more retail stores close, the higher the unemployment will be. If the economy can’t recover fast enough, large amounts of people will be jobless. Unfortunately, that’s where we’re headed.

Here’s a partial list of Retail closings so far:

Circuit City – 155 stores closing

Ann Taylor – 117 Stores to close nationwide (Closings planned over the next 3 years)

Lane Bryant – 40 Stores closing nationwide

Fashion Bug – 100 stores closing nationwide

Catherine’s – 10 stores closing nationwide

KB Toys – 150 stores closing nationwide

Eddie Bauer – 27 stores closing nationwide

Cache – 14 stores closed but several others open

Disney Store – 98 stores closed nationwide

Home Depot – 15 stores closed nationwide, Won’t open 50 stores planned for 2009

Talbots – 78 men’s and children’s stores closed by September

Pacific Sunwear – 154 remaining Demo stores closing

Foot Locker – 140 stores closing by end of 2008

Linens N’ Things – 371 stores liquidating, All set to be closed by Jan. 1

Movie Gallery – 160 stores as part of reorganization plan to exit bankruptcy

Zales – 100 Stores

J. C. Penney, Lowe’s and Office Depot are scaling back or delaying expansion. Office Depot had planned to open 150 stores this year, but will now open 75.

Sprint Nextel – 125 retail locations

(source: http://www.newsnet5.com/news/18011458/detail.html)

I’m sure there are more, as I didn’t need to research very long before finding this list (and a verified list from a news source, not some chain letter email). Keep in mind that the above doesn’t even list the non-retail companies that are laying off people.

The time to prepare is now. It’s not hard to see where the economy is going. There is still time to get ready.

- Rob

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