The days of seeing a Starbucks on every corner could be over. Starbucks and other large retailers have began closing down locations and scaling down expansion due to economic woes.
The housing market has not only affected real estate agencies, it has affected every aspect of the economy. Large retailers including Starbucks, Home Depot and even Wal-Mart are rethinking their plans for expansion.
Home Depot is the largest home improvement chain in the nation. The retailer had plans to expand and open 50 new stores within the next year. Instead, they have decreased the number of new stores and will be opening them at a slower rate.
Home Depot is using this as an opportunity to focus on its existing stores. That means a focus on quality, not quantity.
Industry analysts have said that many companies developed their expansion plans during a period of growth. In the 1990s, the economy was booming and retailers took advantage of that. Now that the economy is slowing, retailers will have to adjust to the market.
With retailers cutting down expansion, results are expected to be both positive and negative. The negative result is the continuing effect it will have on the economy. Since stores are closing down, there will be a loss of jobs for people working at these locations.
In an economy where so many people are already struggling, the end does not seem to be near. Another thing to consider is that by halting expansion not only will there be jobs lost, but few new jobs will be created until the economy has stabilized.
A different look at this situation is that it could definitely change the conditions in the current marketplace. This could be a good thing in a marketplace currently saturated by big business. Many people have protested Wal-Mart’s predatory method of moving into towns and putting all of the small retailers out of business. And, while we all love Starbucks, one doesn’t necessarily have to be on every corner.
Home Depot has announced that even after the economy has stabilized, the home improvement chain will not continue to expand at the rate it did in the past. It will continue to focus on improving existing stores. If other large retailers were smart, they would follow suit.
Many retailers are so fixed on having a store on every corner of the world, they have neglected the stores they already have. There will always be the possibility of reaching new customers, but what about the customers you already have?
Big retailers are slowly learning that they are not immune to the effects of the economy. The economy affects them just as much as it affects you and me. The only difference is that they may never be the same because of it.
Whitney Kinsey is a senior journalism major and a contributing writer for the Daily Forty-Niner.
