Is It A Good Or Bad Thing That So Many Companies Are Going Out Of Business?
What exactly will 2009 bring us in terms of businesses closing down for good? Estimates are that hundreds of large, name brand businesses will go under in 2009 due to the economy – which while sad for the workers is not necessarily a bad thing. We have consumed ourselves right into this mess, and with people starting to buy what they need rather than what they want, many of these stores are seeing their customer base disappear. Shopping had become a national religion for too many people and stores took advantage of that fact by duplicating themselves on every street corner…only to find their customer base disappear this year. We should have known that this level of consumption could not be sustained forever, but not too many business owners thought long term or of anything other than profit; they expanded into every nook and cranny expecting to continue to reap the rewards of the “American Way” of shopping our way into the poorhouse. After all, Americans carry $2.56 trillion in consumer debt, with the average household’s credit card debt amounting to $8,565! Well, it’s over for many businesses already as of the end of 2008:
Lillian Vernon Corp.
Sharper Image
KB Toys
Whitehall Jewelers
Shoe Pavilion
Mervyns
Levitz Furniture
CompUSA
Harold’s
Aloha Airlines
ATA
Bennigan’s
Linens ‘N Things
Bombay Co
Skybus
Steve & Barry’s
Did I miss any companies that went completely out of business in 2008? I know there are many, many more that are either filing for bankruptcy or are already in it, so we won’t know if some of them make it or not. Circuit City is one of those companies that is hoping to make it, but I really don’t see how some of these guys stay in business at all. For electronics, we have Best Buy, Buy.com, Amazon.com, Radio Shack, Fry’s, J&R…never mind the big box stores like Target, Walmart, Sears, K-Mart, etc. …and any Mom & Pop stores, I am just amazed at the amount of duplicity in any given product market. Yet for years they all stayed in business and thrived because we could not stop shopping for anything and everything. But this economy is a survival of the fittest competition, and many of your favorite stores will be disappearing in 2009. I lean to the side of “this is a good thing” because I really think this economy is an eye-opener to what we were spending and supporting all these years, and I am hopeful that long term changes and lessons will come to at least a few of us. So…do you think it’s a good or a bad thing?
I’m torn. I’m happy to see our consumer shop-’til-you-drop culture come to an end. But I feel for the workers and their families that suddenly without an income.
Looking over your list of companies that closed in 2008, I can’t help but rejoice on some level that we’ll have fewer businesses trying to peddle tainted cheap Chinese plastic crap.
The era of cheap energy and cheap credit was an amazing opportunity for us — and instead of taking advantage of that and working to build something of value, we went to Spencer’s Gifts in the mall and bought plastic dog poop imported from China.
How f*cking sad.
I think the list does seem a little short, but I can’t recall the specific companies. I do know however that Bennigan’s (along with Steak & Ale) and CompUSA were purchased and subsequently re-opened. The restaurants were bought by a private equity firm and began re-opening as little as a month after the purchase. CompUSA was purchased by SysteMax and repackaged as a physical representation of it’s Tiger Direct online retailer. Circuit City has been having problems for years, which is why they stopped selling home appliances, and there has been talk of that company going private as well, but nothing has developed as of yet.
It’s kind of hard to say whether or not these failures are a good thing, since competition is good for the consumer, but there are several reasons for each of those failures. Some just were managed poorly (Circuit City) while others (Linens ‘N Things) are in a highly competitive market which was hit hard by the economy. It’s probably a little too early to tell, but in the near-term it’s closer to a bad thing since all of those people are out of work when the unemployment rate was already high and the economy was weak. Only time will tell I guess….
Bennigan’s is back to life? I really thought they disappeared for good!
I have to see it as a good thing. It’s clearing out the market of poorly run companies and leaving room for those companies that are running properly. A thinning of the herd. When things get moving again there will be room for companies who are able to be competitive.
Steve & Barry’s didn’t go completely out of business. They closed a bunch of stores, though.
I think you hit the nail on the head. This correction is long overdue. The survivors from the mess will be stronger and better at maintaining their own health.
It is sad to see things collapsing, but there isn’t any other choice.
I’d like to see chain stores shrink rather than disappear. I suspect many of them took advantage of easy credit to expand beyond the realities of their sector.
Not sorry to see Sharper Image disappear…I always felt most of their rather expensive items were “as seen on TV” crap in upmarket packaging.
@ David:
Yeah, but to what degree I don’t know. Originally, only the corporation-owned restaurants were closed, while the franchisee-owned locations remained opened. Guess that could have been seen as a good thing for the franchisees as they were getting the traffic based on the name recognition but didn’t have to pay the fees or royalties since there was no longer an entity to pay them to. That sure was short-lived.
It’s bad for the employees but a natural part of capitalism.
It will force inefficient companies to get better.
I also feel for those employees whose companies had been closed. They don’t have jobs anymore and their families had been relying so much on them. I just hope they already found a new job and is not suffering from a terrible financial problem.
Anyways, if they really are they can just seek the advise of some debt relief experts also.
I personally wish Congress and the Senate would go out of business, as well as the IRS. Do you realize how much money we would have if the government would keep their sticky fingers out of the pie. We could pay off the national debt in about a week just by stopping all the perks to the heads of our government, i.e., private jets, multiple helicopters, etc. Oh, well, two more years for Congress and 1349 more days til the next election.