Retailers Seeking Salvation

Discussion
Feb 09, 2009

By Bernice Hurst, Managing
Partner, Fine Food Network

In some ways, it’s all
about confidence – consumer confidence, that is. And in others, it’s
about nerves of steel – retailer nerves, that is. Finding the best
way to keep stores open and customers spending is never an easy task but
is so difficult at the moment that some in the industry are seeking outside
assistance from government.

Sir Stuart Rose, executive
chairman of Marks & Spencer and a member of UK Prime Minister Gordon
Brown’s Business Council of corporate leaders, has suggested that retailers
be given "the same level of financial help" as banks and car
companies, according to The Daily Telegraph.

Bearing in mind the number
of people employed by – and losing their jobs in
– the retail industry, Sir Stuart maintains that support packages should
not be confined to the manufacturing sector. "There are potentially
going to be some problems with liquidity and refinancing [among retailers],
and what is going to happen this year when what I call a proper company gets
into trouble? Is the same sort of help going to be offered to these businesses?
I don’t know. Time will tell," he said.

Elsewhere in Europe, just-food reports
that food manufacturers supplying retail chains in Slovakia will be protected
by new laws against "unfair conditions in contracts."

In the U.S., back in December, the
National Retail Federation wrote to President Obama to
request a series of sales tax holidays. Response here on RetailWire was
less than enthusiastic and there is no sign yet that the President disagrees
with their views or has any other immediate plans to prioritize retailers’
quite genuine problems.

The big advantage food
manufacturers and retailers will always have is that people will always
have to eat. They don’t always have to lease or buy cars. The real battle
may be with the competition, not the consumer, begging questions of whether
and how governments can really bail out retailers.

Discussion questions:
Are retailers as deserving of government bailout funds as car and financial
companies?

Please practice The RetailWire Golden Rule when submitting your comments.

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15 Comments on "Retailers Seeking Salvation"


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Li McClelland
Guest
Li McClelland
13 years 3 months ago

I’m gratified to see the near uniformity in the comments on this topic concerning bailout excess. I couldn’t agree more! Too bad Washington continues to be so out of touch with us. Offering an extraordinary, temporary national lifeline to support individual Americans who are suffering is vastly different from asking our grandchildren to still be rewarding bad fiscal behavior by consumers, corporations and governments which occurred before they were even born.

Jonathan Marek
Guest
13 years 3 months ago

Sure, they are every bit as deserving as the auto and finance industries. Or, wait, I meant every bit as UNdeserving. Since when does any company have an unassailable right to stay in business?

Gene Detroyer
Guest
13 years 3 months ago
The financial industry received bailouts because their failure would have a cataclysmic effect on the economy. The question of a bailout for the auto industry is a bit more complex. Ultimately, do the tail effects of the collapse of the U.S. auto makers cost more to the taxpayers than the survival? I don’t know the answer, but it is likely that the cheaper alternative for the government is bailout. I am personally against it, though. The U.S. auto industry has been poorly managed for as long as I can remember and should go out of business. The bailout I believe just prolongs the inevitable. People speak of management change. I believe that poor business practices are so ingrained in the industry that there is too much management to change. Bailouts are not just for bad times. They are to protect against extraordinary consequences. I am afraid I don’t view failure in the retail industry as having extraordinary consequences, other than poorly-run businesses failing as they should.
Ralph Jacobson
Guest
13 years 3 months ago

I think the bigger question is, “Are we doing the right thing by ‘bailing out’ private firms of ANY type in the first place?” The US Government “rolled over” to give financial institution billions of dollars with virtually no controls in place to monitor its usage. In a capitalist society, some private firms will succeed, and some will fail. We are “fooling with the natural course of events.” Giving money to the same leadership who got the firms in trouble makes no sense. Retailers, manufacturers, etc, are no different. The government should truly stimulate spending, not provide loans that these institutions may never repay.

Nikki Baird
Guest
Nikki Baird
13 years 3 months ago
Oh for crying out loud! I knew this is where we would end up as soon as governments started handing out money. If any support should be provided to the retail industry, it should be to ensure that their credit facilities remain untouched by the financial crisis–something that TARP and other countries’ versions of TARP was supposed to accomplish. We’ve seen some quiet renegotiation, we’ve seen some retailers already on the brink claim that having their credit pulled pushed them over the edge, and then a whole lot of nothing. Past consumer spending was based on an over-extension of consumer credit, so we’re not going to see a return to those spending levels until literally the population grows and earnings grow until we get back to that spending level in a more ‘natural’ way. Should governments step in and cover the gap between where we are now and where we were at the near-peak of excess? All the way until we naturally grow back to that level? That seems like we’re asking an awful lot….
Ben Ball
Guest
13 years 3 months ago

Like it or not, retailers are not perceived as “making anything.” They are viewed as an outlet or conduit for manufactured goods (and for the slightly more enlightened–services) to the market.

In economic theory, “merchants” make a living off the exchange between the two real drivers of the economy, producers and consumers. They are facilitators, not creators.

Of course, we never stop to think how many consumers would drive all the way from Kansas City to Topeka to buy a bag of Lay’s Potato Chips from the Frito Lay factory….

Marc Gordon
Guest
Marc Gordon
13 years 3 months ago

Financial help? Come on, people! Business cannot demand freedom to do as they please with minimal government regulations and interference in good times, then have their hands out in bad. This is called thinning the herd. If a business is suffering, regardless of the economy, it is due to either lousy products, high prices, crappy service, or mismanagement.

If anyone needs handouts, it’s the thousands of employees who have been laid off from companies who insist in paying their CEO massive amounts in salaries and bonuses regardless of company performance.

Joel Warady
Guest
Joel Warady
13 years 3 months ago

Where will this idea of bailout ever end? The banks needed it because without the financial system intact, the whole system falls apart. Should the automobile industry have been bailed out? Debatable. But now it seems that there is no end in sight. EVERY industry can make a case for why they are need money, and why their employees contribute to society. But the fact is, we are seeing Darwinism at its finest. It will be survival of the fittest, and the great companies WILL survive, and continue to prosper.

Kevin Graff
Guest
13 years 3 months ago

In short…definitely NOT! This isn’t so much an endorsement of the bailout in the financial and automotive sectors as it is a vote against outright lunacy. If consumers want a retailer to survive they’ll shop there. Even in these tougher times a lot of retailers are still doing well…they’ve figured it out.

Consumers might miss a Marks and Spencer, Macy’s or Loblaws, but their life would go on without so much as a blip on the radar. I’m a huge supporter and believer in retail, I just don’t think any pleas made on bended knee for money from taxpayers should be listened to.

David Livingston
Guest
13 years 3 months ago

I agree with Ralph. We shouldn’t be bailing out anyone. We might as well just print off trillions and pay off everyone’s debts. Banks, car companies, or retailers are in trouble because they had a poor business model. There are plenty of well-run, strong banks, good well-run auto companies, and successful retailers. If we are going to give money to any company, we should give it to the most successful companies to help them acquire and fix the broken companies. We should be giving the money to Honda, Toyota, Walmart, and many small banks that avoided high risk loans.

Herb Sorensen, Ph.D.
Guest
13 years 3 months ago

No one “deserves” this bailout. This is MY money someone else is deciding to dole out by the bucket-load–and YOURS, too. Let’s get this straight, the failed policies of lack of fiscal constraint of the last eight years will now be solved by NO fiscal restraint at all? Outrageous! There is a massive case of stupidity afoot globally. Stop the insanity NOW!!!

Gene Hoffman
Guest
Gene Hoffman
13 years 3 months ago

Like welfare and perks, once the bailout flood gates are opened everyone wants a piece of that dubious action. If a bank, retailer or other company can’t withstand the heat of a poor economy, get out of business. Operating a successful business under all economic conditions is only for the astute business managers. Bailouts rarely build business strength.

Dan Gilmore
Guest
Dan Gilmore
13 years 3 months ago

Everyone in the end may be “bailed out” it seems, but retailers should obviously benefit from any stimulus given to consumers.

And that’s enough.

Pradip V. Mehta, P.E.
Guest
Pradip V. Mehta, P.E.
13 years 3 months ago

Instead of offering financial package or bailing out retailers, the government would be better off creating conditions where by consumers can save more money and have confidence in future so that consumers do not mind spending their discretionary income on clothing, home furnishing, sporting goods, etc.

Jerry Gelsomino
Guest
13 years 3 months ago

How about instead of a bailout, there is a worldwide competition for innovation, creativity, and quality of customer service? How about if retail was once again controlled by merchants, rather than financials who are more concerned with stockholder value. How about if retail conglomerates were broken up and put back in the hands of local management who focused on the local customers’ wants, needs and culture? Now that would be a stimulus plan.

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