Thursday, January 1, 2009

Strange… I made it 338.

440 retailers to go bust in first four months of the year, analysts predict

Experian, a data company which analyses the sector, predicts that a total of 440 retail businesses will go into administration in the first four months of 2009, equating to nearly 26 every week. This would be the worst period for shopkeepers since the depths of the winter of discontent thirty years ago.

Posted by gardeniadotnet @ 08:43 PM (1100 views)
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16 thoughts on “Strange… I made it 338.

  • gardeniadotnet says:

    Then again, I’ve always been an optimist.

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  • Mr De Mello added: “Britain is still a nation of shopkeepers and the retail sector is one of the UK’s largest employers. It is not just people directly employed by retailers that will suffer from the fallout this Christmas, it is also their suppliers, manufacturers and service providers. We are all going to feel the effects as there is no doubt that the impact on retail will resonate through the entire economy.”

    crunchy- No wonder we are in a mess. Looks like another bubbles on the cards or a very painful change.

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  • “No wonder we are in a mess. Looks like another bubbles on the cards or a very painful change.”

    crunchy – it is painful for people who were under the impression that houses only ever go up and think that the current situation is temporary. I think you’re one of these people.

    And how do you reach the logic that “another bubble is on the cards”?

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  • gardeniadotnet says:

    I agree with crunchy – another bubble is on the cards.

    I’ll stick my neck out and add that the next bubble will look remarkably like the last.

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  • The UK is generally in a worse state than the US, just with a time-lag. Consider the following:

    Mish’s: 200,000 Retail Store Closings Coming in 2009
    About 160,000 stores will have closed this year and 200,000 more could close next year, said Burt Flickinger, managing director of consulting firm Strategic Resource Group. That would be the industry’s biggest contraction in 35 years. Flickinger expects 2,000 to 3,000 malls to close in March and April. “You’ll see department stores, specialty stores, discount stores, grocery stores, drugstores, major chains either multi-regionally or nationally go out”.

    Given the time lag for the UK, I’d expect both 2009 and 2010 to be bad years for the UK retail sector.

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  • gardeniadotnet says:

    “2,000 to 3,000 malls to close in March and April.”

    Wow, do you have a prediction for the UK, drewster?

    More specifically, is this the right time for me to open a nail salon at the Trafford Centre?

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  • Gardenia,

    These guys are finance professionals with decades of experience and access to reams of data; I’m just an amateur. I wouldn’t know where to begin with such a prediction.

    Obviously this isn’t the time to open a nail salon 😉
    I know two people who work in hair salons, both have said the same thing. Customers who used to get their hair done every month are now coming in every two months instead; some aren’t coming in at all. Business is slow and both salons are losing money. No sign of relief in the new year.

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  • gardeniadotnet says:

    Thanks drewster.

    Anecdotal evidence seems as valid as any other at the moment. However, at the risk of undermining my initial comment, I suspect that the current economic landscape is even worse than it appears on the surface.

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  • Gardeniadotnet – I really cannot believe the comments you make sometimes.

    Of course it’s not the time to start a nail salon. It’s time to buy someone else’s, cheap as chips, who’s going out of business as they took on too much of a business loan!

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  • gardeniadotnet says:

    9. beartil2010 said.. It’s time to buy someone else’s…

    Yes, but what’s a good fire sale price in the current non-market – 90% off the asking price, or should I wait?

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  • bear – I’m pretty sure he was being ironic.

    gardenia – “what’s a good fire sale price” – You’re spot on, that’s the whole problem. If everyone knew how to fairly value everything, markets would be completely stable all the time. In normal times you could value a nail salon by comparing the costs (store rent, wages, nail polish) against revenues (paying customers), working out the annual profit, and calculating how much capital you could borrow against that predicted revenue stream. That value would be the best guess of the value of the business.

    Right now however there’s no forward visibility – revenues are falling and will probably fall further as fewer customers come in for manicures. Since nobody can predict when (or if) the customers will return, the value of the nail salon is impossible to calculate.

    A similar problem applies to the wider stockmarket – all businesses are difficult to value in the present climate.

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  • gardeniadotnet says:

    11. drewster said… bear – I’m pretty sure he was being ironic.

    You’re damn right I’m being ironic, though no offence meant to all you beauty therapists out there.

    I have two business plans prepared, one entitled Depression Model, the other entitled Hyperinflation Model.

    Patiently awaiting a strong signal either way.

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  • gardenia,

    Hyperinflation is straightforward: leverage yourself to the hilt and buy assets (shares and property). Alternatively just shift all your savings into foreign currency. We aren’t going to have hyperinflation though; it would only take 50% inflation to fix the house price bubble. That 50% could easily be delivered by three years of 15% inflation, which, though high, hardly qualifies as Zimbabwe-esque.

    Depression is a lot trickier. I think a domestic focus is easiest: UK tourist attractions will get a boost from families priced out of Eurozone destinations and downsizing their holidays. Everything from Butlins to Alton Towers should do fairly well. Avoid the luxury market, stick to cheap’n’cheerful. Close your nail salon at the Trafford Centre and open a penny arcade in Rhyl.

    My personal business plan is sticking to my current job, but then I’m not much of an entrepreneur.

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  • stillthinking says:

    UK tourists switching from an expensive Eurozone holiday to a cheaper domestic holiday is the same as collapsing demand, and will not really give an overall boost to the UK, although perhaps relatively speaking it is better for Butlins et al. When you pay a grand for an Italian holiday all they can do with that grand is pay for UK goods/services with it, but you pay only 400 for a Butlins trip then all they can buy is 400 quids worth of stuff.
    Unless you take the view that eurozone expenditure is likely to be held (not spent) but domestic spending is more likely to be spent. I mean, if Butlins spends that 400 quid immediately then that is a much better economic boost than 1000 which isn’t spent by French Disneyland.
    Depression versus inflation. Inflation is much easier to take advantage of but as you say, depression is much trickier. Inflation under GB will be characterised by artificially low rates, so time to become a borrower into other currencies, totally agree. I love the idea of this. Depression means already having money (always tricky) and getting involved in some risky asset, and sounds like hard work, also we might be in recession/depression for a long long long time,the length of the recession is what messes up any valuation a la “the good fire sale price”. The British have already revealed chronic inertia faced with a devaluing currency, so it would seem foolish not to avail yourself of any wealth transfer from the unlucky savers.
    The recession came a bit early for me, if you take my drift, but I have another plan, as yet unrealised, which is to work in a country which has a higher value currency!

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  • 3. paul
    Unsustainable economy.

    That is why we had the bubble.

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  • northern bear says:

    I anticipate big rises in the price of holidays at home as all the hotels etc show their appreciation of the surge in demand by upping their prices.

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