When driving to the mall or local shopping centers you will pass several posted signs and name placards of stores that either are going out of business or that already have. To list a few, stores such as, Circuit City and Mervyn’s have closed and now Gottschalks and Joe’s Sporting Goods are in liquidation.
These businesses have been in existence for numerous years. They have equipment and clothing that consumers trust and rely on, but given the current economy such consumers cannot afford to spend money; thus, businesses are forced to close their doors due to low revenue.
Scott Mayerowitz and Alice Gomstyn of ABC News report, “Retailers had one of their worst holiday shopping seasons (2008) on record and analysts expect many foundering stores now to file for bankruptcy.” While consumers may have a tighter budget due to layoffs and such, they still need to spend when necessary. If you need a new pair of slacks for work, go buy a pair or two. Yet, don’t go overboard by buying everything in sight or by buying items that you may never use.
What consumers seize to recognize is that local and national businesses are closing because people have decided that a way to save money is to not spend at all. Unfortunately, these consumers are only adding to the downfall of the economy because where no money is being put in, no money can come out. Much like the old saying ‘you have to spend money to make money.’
“In 2008, 148,000 stores shut down, the largest number since 2001, according to the International Council of Shopping Centers,” said Mayerowitz and Gomstyn. “Another 73,000 locations may shut their doors in the first half of 2009.” This first half category is where the above examples of Gottschalks and Joe’s are represented.
Each economic industry is counting pennies as they try to ‘rob Peter to pay Paul’. For example, Boeing Co., the world’s second-largest plane maker, reported its first-quarter profit dropped by half, hurt by production cuts as airlines postpone deliveries of new planes,” says NWCN. All industries affect each other as production costs increase or decrease. In this example, consumers refuse to pay airline fairs, which leads to airlines postponing aircraft purchases, which leads to production cuts and income of airplane manufactures. This problem can be solved if consumers only limit their travels, not exclude them all together.
Many are aware that General Motors has been struggling for months and barely avoided closure before the holidays in 2008, as they were given loans from the government. On Monday, NWCN reported GM is making more cuts so they can qualify for more government aid. “About 1,600 white collar workers will lose their jobs in the next few days,” says NWCN. These layoffs can again be contributed to consumers being fearful of spending money. However, one thing to realize is that if you spend money gradually you will only receive money gradually. Thereby, quite possibly in the future there may be too little or no money to go around.
Overall, the companies undergoing liquidation, bankruptcy and layoffs could be decreased if consumers withdrew from their typical spending habits only slightly. By partaking in extreme measures such as, not spending any extra money when applicable, they are only prolonging our economical recession. If society would make strides toward becoming more business savvy, myself included, then we can put a stop to layoffs and business closures.
Mayerowitz, Scott (2009, Jan. 15). Behind the Scenes: Going Out of Business. Retrieved April 22, 2009, from ABC News Business Unit Web site: http://abcnews.go.com/Business/Economy/story?id=6648761&page=1.
(2009, Apr. 20). 1,600 GM workers will loose jobs in next few days. Retrieved April 22, 2009, from NWCN Biz-Tech Web site: http://www.nwcn.com/business/stories/NW_042009BUB-AP_gm-workers-lose-jobs-JM.f2ef35d7.html.
(2009, Apr. 22). Boeing profit drops 50 percent. Retrieved April 22, 2009, from NWCN News Headlines Web site: http://www.nwcn.com/topstories/stories/NW_042209BUB-AP_boeing-profit-decline-JM.fcec374c.html.
http://abcnews.go.com/Business/Economy/story?id=6648761&page=1
http://www.nwcn.com/business/stories/NW_042009BUB-AP_gm-workers-lose-jobs-JM.f2ef35d7.html
http://www.nwcn.com/topstories/stories/NW_042209BUB-AP_boeing-profit-decline-JM.fcec374c.html
