Recent estimates predict that major retailers, including discount retailers, will close over 8,000 stores this year. Over 60,000 retail jobs have already been eliminated.
What is not being sufficiently reported is the inevitable trickle-down effect on smaller "Main Street" retailers that make up 98% of retail marketplace and employ fewer than 50 people.
With assumptions concerning retail now becoming reality, it is prudent for small retailers and their proactive lenders to evaluate contingency plans in order to preserve capital. As the apocalyptic effect trickles down, discounted inventories will saturate the marketplace, and small retailers lacking robust operations, optimal turn rates and healthy profitability will face diminishing inventory value.
When evaluating strategies becomes imperative, the most viable alternatives are to sell surplus inventory through a promotion in order to scale into a sustainable operation, or execute a total store liquidation for potential returns of $.90-$1.10 on the cost dollar. If effective strategic planning is delayed, inventory values can quickly diminish to below $.10 on the cost dollar.
Time is no longer on a retailer's side, but strategic timing, albeit limited, still is.
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