- Business and Employment»
- History of Business
The Death of the American Discount Department Store
Bradlee's Final Days TV Commercial
The Cold, Hard Truth About Discount Deparment Stores
If you go back in history and Google the names of long-gone, historically signficant discount department stores, such as The Big N, WT Grant's, Two Guys, Kings Department Stores, Jameway, Ames, J.J. Newberry, and perhaps many others, you'll find a common leading sentence that starts "blankety-blank.WAS a discount department store from blah blah until blah blah when the chain was forced to close due to an 'inablity to adapt to a changing economic climate.'" In my youth, I was employed by a few of those historical big names, and one of the underlying causes of their demise; however, not the only one, was the advent of the shopping mall. When I saw the potential to be in the unemployment line looming large, I shifted my allegencies and sought employment with one of the big mall department stores, where I spent a significant portion of my working career.
The stores that I remember followed a trend in their demise. The first ones to go were the ones situated on Main Street America. When the mall came to town, they managed to chug along for a short time, but eventually the mall started to take it's toll, and one-by-one, they started closing their doors. Some of them were bought out by other discount department store chains that thought they could revive them, but the same story soon followed with the new owners. There are no discount deparment stores left on Main Street in my hometown.
The next group to fall were the discount department stores in strip malls, like most WT Grant's, Ames, and Jamesway stores among others. Almost all of these stores are now either boarded up, or they've been bought by Wal-Mart, K-Mart, Costco, or similar stores that have huge buying power. I wonder will the trend continue? Will someone bigger and badder come along and force out Wal-Mart and K-Mart? People, probably say that could never happen, but if it weren't for government bailouts, America's Big Three automakers might not be around anymore, and I have no doubt that somewhere Wal-Mart has an underlying weakness that some competitor will eventually find and capitalize upon. History, as we all know, DOES repeat itself.
Playing Both Ends Against the Middle
Many of those discount department stores that went belly-up between the '70's and '90's started playing games with investor dividends that ended up costing them big time. When it was discovered that they couldn't cover paying investor dividends out of their profits, many of them moved to borrowing money to pay dividends rather than chance losing investors by not paying dividends. Looking back, some of them might have survived if they took it in the rear and stopped paying dividends until they could actually afford to do so. But what big corporation wants to be publicly embarrassed on Wall Street by announcing that they can't afford to pay their investors? Simply, the answer is not many. Unfortunately, the actions taken by borrowing money instead, is like a snowball rolling downhill gathering more snow and more speed until eventually it hits the bottom and meets the immovable force. An object in motion tends to stay in motion, even if the motion is wrong.
Here Today, Gone Tomorrow
The Underlying Lesson to be Learned
The Underlying Lesson to be Learned
You may be asking, by this time, what exactly is the point of an article about businesses that are ancient history to most people. But, there is a very important lesson for individuals to learn from what goes on in the business world around us. First and foremost, that lesson is, never rely on someone other than yourself for your financial security. Many of the people that were employed by the companies mentioned above, not to mention other Mega companies that operated in other sectors, such as Enron, Sperry-Univac, and Agere, to name a few, put their faith and trust in those companies to leave them with a good pension and nice retirement.
POOF!!!! Bye-bye American Dream. Anyone who thinks they have financial security as long as they working for someone else is deluding themselves. My best advice, is be prepared now, for what may or may not happen in the future.
If you are already rich, then this may not be of any concern to you, but most of us aren't in that position. There are various ways that one can protect one's self from financial uncertainty, but most of them take a long time to implement. Only a very few, can be implemented in a relatively short period of time (ie 3-5 years).
What Do You Think is the Best Way?
What is the Most Secure Way to Protect Your Financial Future
Ames Going Out of Business Sale Commercial
A (Very Partial) Laundry List of Out of Business Discount Retailers
Years of Operation
1906 until 1976
1958 until 2002
1961 until 1995
1946 until 1982
J. J. Newberry
1911 until 2002
Hess's Department Stores
1897 until 1998
1971 until 1996
Strawbridge & Clothier
1868 until 2006
1958 until 2001
1879 until 1997
1887 until 1987
King's Department Stores
1956 until 1984
1951 until 1999
1872 until 2002
The Big N
1960's until 1978
The Future of American Discount Retailers
With the plethora of American Discount Retailers that have gone defunct over the past hundred years or so, one must ask, what does the future hold for Wal-Mart, Target, and K-Mart which seem to be the last three surviving bastions in a land of mass extinction. Oddly enough "Walmart, Kmart, and Target all opened their first locations in 1962." Quoted from http://en.wikipedia.org/wiki/Discount_store
If history is any indicator, the longest survivors to date have lasted a hundred years, with most going defunct much sooner than that. There are some indicators in the wings that there are some financial struggles going on within the the ranks of one or more of these three, and it's no secret that Wal-Mart has come under a great deal of fire for it's treatment of it's workers both here and within Chinese companies that Wal-Mart buys products from. How would America be affected if Wal-Mart, Target, and K-Mart all went out of business? How many jobs would be lost? It isn't only jobs in America that would be affected, it would also be jobs in all of the countries that produce goods for those three retailers. It would affect the stock market. It might affect how and where you do your shopping in the future, and it might change your annual cost of living.
Perhaps, in the grand scheme of things, it's no accident that you find many Subway eateries (the largest chain restaurant in the world) in Wal-Mart stores (the largest retail chain in the world). Imagine, if you would, a world in which neither existed. How would it change your life? My job is to make you think, and to make you think about preparing for unexpected changes in your life and circumstances. No matter what you do in life, make sure that the one thing you do is prepare for anything that has the potential to adversely impact you financially.