People are talking about a possible recession, I hate to tell you this, the retail sector is already seeing a recession.
My company has quite a few online retail outlets as well as a 'brick and mortar' outlet. Sales have been sporadic since very early this year. We've seen maybe two good months of strong sales and the rest were way below average.
So what's causing the retail recession? It's simple. Greedy energy companies such as gasoline and electrical utilities. In addition the loan industry isn't helping much either. You can blame big business for slamming consumers with higher energy prices, interest rate increases such as credit card rates and higher energy costs.
Being a small business in the grand scheme of things we've seen it coming since before the beginning of 2007. More smaller businesses are contacting our company to build them online presences than ever before. We are talking near record numbers. Small retailers are seeing lower sales and are scrambling to find additional ways to boost sales. Frequently small businesses are turning to the Internet to increase sales.
Leasing companies raising rent and fees on retail leasing space isn't doing anything to help matters either. I cannot for the life of me understand why property management companies would raise prices when retailers are not expanding, coupled with the fact that fewer new businesses launching, isn't helping matters at all. I imagine many retail leasing companies are scratching their heads over why they have so much empty space and cannot fill it. All you have to do is drive down the road and look at all the "retail space available" and "now leasing" signs to see that something is wrong.
Home sales are at a six year low, builders have over-built when all the signs have been pointing to a slow-down in the real estate and residential construction industry. The various lending debacles of late have done nothing but intensify the problem. Foreclosures are climbing like the space shuttle on launch day, and the ride is no where near over.
So what's happening? Consumers are getting hit on all sides with higher prices. This means consumers are tightening their belts and making do with what they have. High gas prices, high interest rates, a higher cost of living are several of the reasons why the retail industry, loan industry and real estate industry are getting slammed right now. Frequently consumers are finding that there is more month left at the end of the money, rather than the other way around.
I think maybe a recession is needed so that prices will drop across the board and maybe, just maybe consumers will start spending again. Until then it is going to be a slow downhill slide and many small retailers aren't going to fare well, if at all.
Copyright © 2007, Allen Harkleroad, All Rights Reserved