The Empty Fortunes of Retail

As much as I would like to work solely from my freelance prospects, I too work part-time at what is officially dubbed on the Stock Market as a “discount retailer” in order to help out pay some small bills, groceries, and the dreaded consumption of gasoline. Although the paycheck is meager at best, it’s helping in reducing my long overdue debt.

The U.S. economy is in the tank and inflation is here to stay, whether anyone likes it or not, and businesses nationwide are affected. Being an employee of said “discount retailer,” I have observed several economical effects that have changed the chain retail store. Some of these observations may sound obvious while others are in direct effect of the current economy.

1. Decrease in Product Stock
For close to a year the distribution and variety of product stock to this particular store has decreased at least by half or more, leaving a nearly empty stock room with barren shelves to collect dust. Demand for products has decreased as the economy continues to weaken the U.S. dollar. People are spending less in correlation to rising fuel prices, which is the next point.

2. High Fuel Costs, Less Deliveries
The high cost of diesel fuel has directly affected the distribution process of products, most of which come from China, and are driven across country to the southeastern distribution center for the retailer in southern Georgia. As of last year, there was an average of seven 53’ tractor trailer deliveries per month that were fully loaded to the door. However now deliveries have decreased to an average of 3-4 per month with trailers being ¾ to ½ full leaving little to stock on the merchandising floor.

3. Unfulfilled Advertisements
Since there is less product stock coming into the store, customers are becoming more frustrated due to “false advertisement” of product availability in advertisements and mailers. Usually these frustrations are centered on the limited availability of seasonal items, although recently it has become a problem for regular year-round merchandise as well. Sometimes certain products will only be shipped once for the whole month and are usually sold out the same day due to the distributor only sending no more than two. If you are a customer who would like to file a formal complaint against a retailer, check out the Better Business Bureau for more info.

4. Less Clearance & MOS
The particular retailer I work for known for their extravagant clearance pricing, liquidating much of their stock at low prices in short cycles. Unfortunately this practice has dropped in frequency in the past year having new clearance every 2-3 months with very few products being designated as such. There are still Christmas items in the store! Another problem is the Mark Out of Stock (MOS) system has been discontinued – MOS means that after a certain period of time clearance items are removed from the sales floor and shipped to a distribution center to be sold off, usually having clothes end up in places like Uganda. Since the MOS system has discontinued, old clearance remains on the floor thus decreasing the frequency of newly marked clearance.

5. Price Inflation
In the past two months alone for approximately every two weeks the retailer has been issued to mark up prices on products throughout the store. Jewelry, gold and sterling silver have jumped in price overwhelmingly, while select perfumes have gone up as much as $10. Electronics and select textiles have increased in price as well. For instance, just this week the price of Levi Jeans went up by three dollars.

6. Payroll Cuts
Although no one in upper management is saying a word about this, but there has been a noticeable cut in payroll in the last few months. Less employees are working and those who do work more frequently are working less hours as well. There are days where the store is managed by a “skeleton crew” where there maybe two cashiers, customer service representative, housekeeping and one manager. Another issue is that the store is understaffed, yet very few new hires are accepted. There are even supervisor/manager level positions that have been left unfulfilled for over six months!

7. Pushing the Credit Card
Like most retailers these days everybody has a credit card to hand out with a percentage off the purchase price at the register. Everyday unrealistic goals are pronounced that are usually not met by the end of the sales day. Customers are refusing to accept the credit card because of the bad economy. For this store the credit card’s APR is 17.9%! What most customers do not realize is that once they file for the new card, they automatically lose twenty points on their credit score. In the end the loss is more than the gain at the register.

People are still spending, just less of it. With the costs of food and fuel increasing on a daily rate, retailers are going to have to cope with the fiscal losses in new ways. Raising prices and cutting employee hours are only temporary fixes in order to meet monthly quotas.

One point that I left out above is that this retail store refuses to cut costs from operational spending. Every month a shipment of supplies arrives on a pallet that includes everything from office supplies to housekeeping materials. Unfortunately every month boxes and boxes of tissue paper arrive that are unneeded. There is a room now reserved for tissue paper because there is too much of it. Yet the need for more shopping bags increases, but the order never changes.

If this store, and probably every store in this retail chain, were to open an hour late and close an hour early, it would be saving thousands of dollars on energy costs which then could be switched over to pay fuel costs for the trucks to increase the flow of product. The likelihood of that happening is null and void at this point.