The surging cost of necessities has led to a national belt-tightening among consumers. Figures released on Monday showed that spending on food and gasoline is crowding out other purchases, leaving people with less to spend on furniture, clothing and electronics. Consequently, chains specializing in those goods are proving vulnerable.
Retailing is a business with big ups and downs during the year, and retailers rely heavily on borrowed money to finance their purchases of merchandise and even to meet payrolls during slow periods. Yet the nation’s banks, struggling with the growing mortgage crisis, have started to balk at extending new loans, effectively cutting up the retail industry’s collective credit cards
But isn't it also true that the growth in dollars from year to year has been, in many cases, due to the opening of new stores? In the post 1990 retail world, promotion and increased square footage has driven quarterly growth, rather than smart buying, great staffing, and practical operations budgets. At some point, this is unsustainable.
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