One of the often overlooked side effects of the credit bubble was the rapid expansion of the retail sector.
Shopping malls,strips,precincts,home maker centres etc have literally exploded over the past decade.
Anyone who wanted to start their own business was able to.
Consequently we have a glut of nearly every type of business imaginable.
This has lead to massive over capacity in all sectors of small to medium size business.
Franchises did especially well during the boom.
Franchisees will really struggle if they paid 'top dollar' to buy a well known franchise during the boom.
Now that the economy is going bust,I think many,many of these small businesses are going to go bust with it.
I would say half of all businesses in the malls are selling frivolous rubbish that no one really needs.
These shops will be the first to go.
Closely followed by frivolous services.
Next to really feel the pinch will be big ticket items.
Not to mention cars (Toyota has stopped production for 8 days in Melbourne,with JIT production lines,that must be a nightmare for suppliers).
The 'specialist' type shops that sell one item or one theme will struggle against the big chains if they start stocking those goods.(most already do)
The list of frivolous goods and services that will struggle to survive include the following.
Scented Candle shops
Scrap booking shops
Restaurants
Kitchen ware
Pet shops
Gyms
Personal trainers
Glamour photography
Gym equipment
BOATS
Jet skis
Pianos
Pool Tables
Spa's
BBQs
Outdoor furniture
White goods
TVs
Lounge suites
Bedding stores
Soap shops
Jewelery shops
Storage shops
Luggage shops
Dog washers
Car washers
Lawn mowing
House cleaning
Even stand alone butchers and fruit shops will struggle.
Womens fashion could also struggle as most women generally try to balance the family budget and they usually go without before the kids.
The bulk of these businesses will struggle to survive because their business models no longer work.
Rent will be the single biggest killer for the operators in the malls and the big box stores.
Over capacity coupled with a retrenching consumer will kill off the rest.
If people are struggling to feed their pets or put food on the table or fuel in their cars or pay the mortgage or rent,I can't see many folks paying $15 for a scented candle or $50 for a personal trainer to run you round a park,let alone a new boat or lounge suite.
Companies like Westfield have a huge decision to make shortly.
Do they drop rents to help business models work or end up with ghost towns.
On previous experience I wouldn't hold my breath if I owned a shop,but then again these are extraordinary times.
I often wondered how half the stores in the malls made money during the good times considering the type of junk they sold.
Anyway those days are over,frugality is the new black.
The govt can only hand out 'free' money for so long.
Here is a question to ponder?
Did we already have inflation?
Those expecting inflation or hyperinflation may need to rethink their theories.
How come it costs $350 to take a family of 6 for a pub meal.
Bread,4 Entrees,6 steaks and a few drinks UFB.
We could have deflation for years.
- Forums
- ASX - General
- frivolous businesses that will struggle
frivolous businesses that will struggle
-
- There are more pages in this discussion • 101 more messages in this thread...
You’re viewing a single post only. To view the entire thread just sign in or Join Now (FREE)