Yesterday morning, I had just paid for my coffee at the Starbucks drive thru when out of the blue something happened that left me speechless. My four year old, who often says entertaining things when we are driving, said to me "Daddy - Why are so many stores out of business? Why are all those stores empty?".
I am assuming this question had something to do with a Thanksgiving day conversation with a few family members about some local and big businesses that have gone away. However, I am not sure and never expected that question!
My response (the best I could come up with on the spot) was "That is a great question. Give me a minute to see if I can explain it in a way that would make sense".... He said "OK" and patiently waited. The clock was ticking. The silence was deafening. As I drove through the parking lot scrambling in my mind for a logical answer, I thought to myself:
- because of the greed on Wall Street
- because the company that rented this building inflated its projections, missed its targets, is in hot water, and had to close
- because until 2 months ago, anyone with a pulse could get a loan and start a business
- because people have less discretionary money and these stores don't provide something deemed a "necessity"
- because it makes more sense for small business owners to declare bankruptcy and start over again under a new name
- because many homeowners paid much more for their homes than they are now worth which is requiring them to change careers for stability
- because the big stores put the little ones out of business because they have the resources to innovate
I quickly realized that I was running out of time to answer the question - how am I going to explain this in a way that makes sense?
Then it came to me and I said..."The reason why is because people are finding it more convenient to buy things on their computer like Mom and Dad do all the time".
As I look back, I am not sure I could have come up with a more logical and accurate answer. For this years holiday season, over $10.41 Billion has already been spent online and ecommerce on Black Friday was up slightly over 2007 according to Comscore. Avoid the lines, get easy access to peer reviews of the products/services, and research the products from our homes - sold.
Let's hope the next few months revive optimism and help us to eliminate some of these awfully difficult questions.