The consumer spending slowdown that began in 2007 is turning into a new store slowdown for 2008.
Retailers may have closed the books on their fiscal years only yesterday, but many have already ratcheted back expansion plans for this new fiscal year, realizing the rocky economy and a cash-strapped consumer will no longer support heady store opening plans.
On Wednesday, Starbucks said it would close 100 underperforming U.S. stores and slow domestic openings in the face of a likely consumer recession, while AnnTaylor Stores Corp said it would close 117 stores and also delay until next year the launch of its new store concept.
On Thursday, J.C. Penney said it might cut 10 or more of the 50 stores it planned to open each year in 2008 and 2009. 
Why the increasingly loud chorus of retailers pulling back?
Well, holiday sales rose at their slowest pace in five years. And the environment is not expected to improve much this year – 2008 retail sales are forecast to increase at their lowest level in six years, according to the National Retail Federation.
And right now, with everyone else doing it, it just might be the perfect time for retailers to get a free pass to rein in their expansion plans.
“This is going to be the year when the retailers look upon themselves and say: ‘Hey, I can change the growth plan that I put there right now because the Street will accept it’,” said Marshal Cohen, chief industry analyst at NPD Group.
(Photos: Reuters)
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Closing under performing stores or job cuts is a temporary solution in the current recession period. According to some newspapers, in U.S. around 17000 people lost job in January 2008. For the time being company can control it’s some loss. If it will continue then people will face worst situation in coming future.
Many companies misinterpreted “Globalization of the Economy” and forgot basic of the economics’ demand and supply. Chinese can make a low cost product and Indians can work on low salary. U.S. companies have moved factories into china for cheap products and call center, BPO, IT firms into India for cheap labor. It’s the wrong way of globalization.
U.S., Japan, U.K. and other advance countries using BRIC countries for their own business. It’s helping a lot to GDP growth of BRIC countries. In fact it’s the slow poison for all economy of world.
U.S. companies moved factories and white-collar jobs (IT, call center and BPO) into other cheap labor countries. How many years U.S. people can buy products without a job? One day they will loose their buying power and people of world started to talk about one worst recession since World War II.
- Posted by Ajit