Any way the wind blows…

March 12, 2014 admin

“Easy come, easy go, will you let me go, BISMILLAH! No, we will not let you go, let him go!” This lyric from the famous Queen song “Bohemian Rhapsody” seems to characterize the current retail market these days when it comes to big name retailers.

Last June, I wrote an article titled “The future of online spending and e-commerce,” and it seems that some of the things that were predicted are coming to a head. A recent report by ABC News states that companies that were once the darlings of malls and shoppers recently have made headlines for financial struggles.

A change in consumer tastes and technological changes has caused a shift in preference for consumer spending. Food retailers such as Sbarro and Quiznos are among the top chains that are set to be making large cuts and possibly going out of business in the coming years.

Sbarro, according to a Wall Street Journal article, is considering bankruptcy and has about $140 million in debt. Quiznos is also considering bankruptcy, as it is in debt for $570 million. The chain has closed thousands of locations, having approximately 2,100 locations (a small amount when compared to rival sandwich-maker Subway’s 41,391 locations in 104 countries).

This change may be due to the fact that people these days are trying to maintain a healthier diet, i.e., eating more vegetables, cutting back on carbs, using more organic and locally grown products and eating less processed foods. This shift may be a start of a string of fast food chains seeing hard times.

The article names other companies such as Barnes and Noble, Staples, Radio Shack and Sears, all of which can only point to one thing: consumers are starting to go online find what they need and search for a better price. It is also more convenient for consumers to shop online, which in turns saves them time to do other things rather than going to the actual store location.

Staples recently announced it would close 225 of its 1,846 locations, as half of its sales are made online. This closure would save approximately $500 million in cost cutting efforts. Sears isn’t showing too much of glimmer either, after closing hundreds of stores and reporting $358 million in losses in its fourth quarter. CEO Eddie Lampert was quoted by the Associated Press stating that the holiday season was tough to terrible.

On the technology front, BlackBerry seems to be losing the smartphone war. The article states that back in December, BlackBerry announced that it lost $4.4 million in the third quarter and restructured the company. Though it is not the first choice in smart phones these days, CEO John Chen, who took over in November, has helped raise the stock more than 50 percent.

With the bankruptcies and closures of these major retailers that were once gems in the retail consumer world, it will be interesting to see what other retailers will be at the chopping block by the end of 2014.

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DenisefinalwebDenise DeChaine is special projects editor at Institutional Real Estate, Inc.

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