Much of the retail industry has become its own worst enemy. Though inflation and a recession have only just begun to harm them, there were other earlier warnings to many brick-and-mortar companies that have suffered financially through the past few quarters.
Sears and JCPenney share three things in common. Each is old, with Sears founded in 1892 and JCPenney in 1898. For years, each was among the largest retailers in America. Finally, each suffered financial disaster under poor management that pushed them to oblivion.
Can retailers be successful for only so long? Maybe not. Walmart has been the largest retailer in the United States for decades. However, it has been particularly well managed by a balance among logistics, inventory management, pricing that has bought in customers in huge numbers and a large national store footprint. It has won a distinction no other retailer had. It is the largest public company in America, based on both revenue and number of employees.
Inventory management is where many of America’s preeminent retailers have stumbled recently, and it has cost them dearly. Target is the largest retailer that stocked inventory of items too few people wanted. This has led to discounts, which has led to lower margins. Management insists the situation will improve, There is no evidence of that.
Gap has been a major retailer so long one would think management would be at least competent. Inventory problems and confusion about its store brands have dragged its prospects down for several years and will continue to do so.
Macy’s management is so poorly regarded that its stock price is down by 40% this year.
Retail analysts often claim that Sears and JCPenney did not have to compete with Amazon during their best years. The retort to that is America’s largest retailers could have built online stores earlier than they did. Instead, they let Amazon catch and maul them from behind, and now it has overtaken them in revenue (with the exception of Walmart)
Sears and JCPenney barely exist at all now. They have joined other companies in the retail graveyard.
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