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Retail’s Sinking Ship

sinking ship At a meeting this week of The Presidents Forum, as part of a broader discussion about long-range planning, risk management, and market opportunities, the members talked about the ominous tones coming from the retail sector. There are lessons to be learned from this troubled sector, but mainly a reluctance to change. As an example, on Tuesday, Sears announced in their annual 10K filing “Our historical operating results indicate substantial doubt exists related to the Company’s ability to continue as a going concern…While our historical operating results indicate substantial doubt exists, we want to be very clear that we’re taking decisive actions to mitigate that doubt.” While Sears may mitigate losses, and raise cash by selling assets such as Kenmore appliances, Diehard batteries and the recent sale of Craftsman tools, Sears will struggle as they attempt to transform itself from a catalog mentality to an on-line mindset. Change may be hard but as former UCLA basketball coach John Wooden said “Failure is not fatal, but failure to change might be.” An active discussion among the members revolved around the need to keep focused on our principle business activity. The lesson for us, as the members stressed, is to continually assess our own business model to assure it continues to focus on the needs of our future customers not the past ones. And, of course, change when necessary.

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