Can someone explain...Retail Chains Closing (employment, wages, ethic, legal)

[Mircea]

Originally Posted by natalayjones

Can someone give me the 3rd grade explanation of how this works?

A business is, well, a business, and not a charity. Employing people is not the function of a business. The function of a business is to provide goods and services for consumers and make profits for investors. The employment of people is merely incidental to providing goods and services.

A publicly traded corporation has a legal, moral and ethical obligation to make a profit for its shareholders. For a retail chain, that means closing stores that aren't turning a profit. The stores that Starsucks is closing probably never made a single dime in profit during their entire operation. They were dragging down the rest of the company, so they had to be closed. The same is true for the rest of retail chains you mentioned.

Oftentimes to make a profit, a publicly traded corporation must close its facilities in the US and move to other countries to avoid costs incurred due to oppressive taxes by municipalities, counties, and states, and costs incurred due to oppressive legislation and regulation, like minimum wages, environmental compliance, laws requiring "health insurance," mandatory days off and so on.

[roberta]

Originally Posted by natalayjones

I try to watch the news, read the paper, be informed, etc...but there is just one thing I don't understand about the current state of the economy.

And that's all the retail chains closing.

There was a big news story here a few days ago because they're closing about 20 local Starbucks and the people are just being laid off, not reassigned to other stores.

Now in my mind I really don't think Starbucks is really hurting financially, so it doesn't seem logical to me to close the stores. Closing the stores means we'll have more buildings sitting empty, which in Orlando quickly causes a problem as homeless people take residence in them, and more unemployed people. And obviously there aren't that many jobs since unemployment benefits were just extended 13 weeks...so now there are even less people making money that might have spent buying coffee. It just doesn't make sense to me...

I won't even pretend to be that knowledgeable in economics but I just don't understand how this huge retailers figure they'll save money by closing stores and laying off all their employees - if no one's working, who's going to shop?

Can someone give me the 3rd grade explanation of how this works?

People are uneasy these days, about the economy--gas prices--food prices--bank failures--employnent, ect. They are spending less on shopping, eating out, traveling--. Starbucks is a luxury these days. You can make your own coffee much cheaper. More people are shopping in Walmart--people who, at one time wouldn't go in there. Even thrift-shop business has picked up--Goodwill, ect. I was in the market yesterday, and for the 1st time, heard people complaining about the prices. Bread is around 4 dollars a loaf now, except for the cheaper, doughy white bread. Many people are not buying luxuries these days. I feel it, because I am a fine artist who has somewhat of a known reputation, and for a good while have made a decent livlihood--until now. This yr, I think I would have trouble giving the artwork away. Art is a luxury, and is one of the 1st things people don't buy in hard economic times. The fact that I live in a town whose economy is based on art, is really telling. I live in Santa Fe, NM--which is the 3rd largest art market. with over 200 galleries, in a town of 70,000 population. I know there will be a lot of Galleries closing this yr. We usually get many tourists in the summer. and of course will get less this yr, because of gas prices. We have several Starbucks here, and I don't think any have closed yet. I have noticed that our usually crowded restuarants are not crowded now, and the Mall is empty. Many people, all over are losing their homes to foreclosure. The housing market is in the pits, most places. I hope it gets better soon, but I don't see either of the 2 presidential candidates helping it to do so. I am for neither of them. They are both for amnesty for illegal immigrants, who are really putting a drain on our economic social services. Our town is over-run with them, as it is an un- official santuary town. Our govenor is Bill Richardson, who is on Obama's list of potential VP's. He has done nothing to better the State of NM, so I doubt if he would do much as VP. Oh my, I have too many topics going here, so I had better quit.

[saganista]

Originally Posted by Mircea

A business is, well, a business, and not a charity. Employing people is not the function of a business. The function of a business is to provide goods and services for consumers and make profits for investors. The employment of people is merely incidental to providing goods and services.

And providing goods and services is merely incidental to earning a profit, i.e, to accumulating more capital. At its unfetterd core, capitalism makes everything else subservient to the accumulation of more capital. That's why it is called capitalism to begin with.

Originally Posted by Mircea

A publicly traded corporation has a legal, moral and ethical obligation to make a profit for its shareholders.

You could have stopped at a legal obligation to pursue profit on behalf of shareholders. The moral and ethical implcations of capitalism are and have long been the subject of much debate, and the system is hardly without its very sharp critics in these areas.

Originally Posted by Mircea

Oftentimes to make a profit, a publicly traded corporation must close its facilities in the US and move to other countries to avoid costs incurred due to oppressive taxes by municipalities, counties, and states, and costs incurred due to oppressive legislation and regulation, like minimum wages, environmental compliance, laws requiring "health insurance," mandatory days off and so on.

Yes, restrictions on the ability of corporations to exploit natural resources -- including human ones -- on abusive terms while entirely externalizing the social costs of that abusive exploitation are often cited by abusive exploitationists as reasons for taking their abusive exploitation elsewhere. This is one of the reasons why the morals and ethics of capitalism are so frequently called into question.

[Wendell Phillips]

U.S. retail chains caught in a wave of bankruptcies - International Herald Tribune

[colorado native]

I think this has been all part of the plan from the get-go: Open as many stores in as many places as possible, squeeze out the little guys, then cut back and enjoy your new competition-free market. If too many Starbucks stores are cannibalizing sales from each other, that means they're slicing profits for their competition, too. As an enormous corporation, they can wait the little guys out, losing money on a few stores won't damage them too much. Meanwhile the coffee shop down the street just can't pay the bills and eventually closes down. Some might say that the Indie store is just not as good, and that's why they went under, but the reality of it is that we the consumer are frightened little sheep that quake in the face of the unknown. This is why Americans eat at McDonald's in Paris.

Wal-Mart and others have been doing this so much that there's even a new book coming out about how communities can use these empty buildings (kinda what 1000 mentioned earlier): Big Box Reuse - The MIT Press

Build two stores in two geographically close communites, keep prices low until the competition goes away, close both stores and open a "supercenter" in the middle. The box stores get gov't subsidies for constructing these monstrosities, so the numbers add up hugely in their favor, despite the wasteland they leave in their wake.

Kinda sickens me, but apparently this is what the American consumer wants.

[Wendell Phillips]

Consider the following scenario:

The town council of Yourtown, U.S.A. has voted to condemn an old neighborhood to make way for a new shopping center that will be leased to Zmart Corporation, which has hundreds of stores nationwide. As an inducement for the development, the town council was told that Zmart would provide hundreds of jobs for Yourtown that would enhance the economy of the community. However, these jobs turned out to be very low paying, and in the process, Zmart drove all the small businesses of Yourtown out of business. After a while, sales decline, and Zmart (which has billions in cash reserves and financially solvent) has decided to move on to greener pastures, and filed for bankruptcy reorganization and submitted a plan including the rejection of the lease, leaving Yourtown a ghost town.

Do you get the picture?

[arctichomesteader]

Originally Posted by natalayjones

I can understand some stores - Winn Dixie's have been steadily closing here for several years now because they're stores aren't as consumer friendly as Publix or Albertsons - but recent closings in my area are Toys R Us, Bed Bath & Beyond, Linen and Things, Kohl's, Lane Bryant, Payless. I doubt these stores are going to completely go out of business is the next few years so I don't understand the drastic need to close. I have noticed though it's usually ones that are set off by themselves and not inside a mall or they are the main store in a shopping plaza.

I agree that a lot of these places were built way to close to each other but is the economy really that bad right now that they just all close down? On my way to work I pass by like 3 or 4 plazas that look deserted now because the anchor stores have closed down and there's only little filler stores like pizza places and nail salons, which will eventually close because there's no business coming in.

At this rate we'll just be left with Wal-mart
I guess I'm just looking at it from the wrong perspective. I am not at all business savvy.

You are looking at things wrong. The only concern of the businesses is their bottom line, their profits. Their stockholders demand them to be profitable. As profitability declines or disappears in individual stores they'll close them in the hopes of improving overall profits by eliminating stores that are losing money. Some chains are in big trouble and are getting a bit desperate from the looks of things. Keep in mind that, all propaganda/public relations material aside, these big businesses generally don't care one bit about any community and how they help or hurt them. It's all about money to them. If keeping the store opened makes money they'll do it, if closing itis the better option financially they'll do it. If Wal Mart turns a town into a ghost town by driving out other businesses then closing up shop later, well, too bad, is their attitude. Understand that and things will make more sense. I suspect you like most people play right into their hands too, being a good little consumerist, wanting a nice car, lots of clothes, all the latest gadgets, a big house, etc. People enslave themeselves in a capitalist/consumerist system, the government enslaves them in a socialist/communist system.

[nat_at772]

Thanks, everyone for the input. I guess I understand the concept now; I just don't like it.

Originally Posted by One Thousand

I gather that you're implying that by employing people, they are able to sell to those people... It's reminiscent of some of the things the union reps used to tell us. There's a round-about accuracy in it, but it's an oversimplification... and it's in the simplification that the logical connection is lost.

It's not that the people making coffee will buy coffee-- What matters is that the people making coffee buy other stuff. The people making the other stuff will then buy coffee. However, in order for the people who make other stuff to be willing to buy your coffee, the coffee-makers have to have a desirable product-- cheaper, better, etc.

I think that's pretty much where my brain was going; people who work at Starbucks go spend money in other stores, people who work in the other stores in turn go spend money at Starbucks. I was also thinking that if they close the Starbucks, the people who they laid off won't go spend money in the other stores and then the other stores will close as well.

Originally Posted by arctichomesteader

I suspect you like most people play right into their hands too, being a good little consumerist, wanting a nice car, lots of clothes, all the latest gadgets, a big house, etc.

Now that is not me. Maybe the clothes, because I do have more than can fit in my closet but that’s because I hate to throw things away. I’m one of those people who will hold on to something even though I know I will never again in life be a size 6 or wear the Perry Ellis jacket I begged for in high school because I’m convinced as soon as I throw it out I’ll need it. I’m also a big bargain shopper; I only shop at department stores when they’re having sales and even then I’m on the clearance rack. I hate paying full price for anything.

I drive a Diamante, a 2001 – I’ve had it for about 5 years now. Don’t have any of the latest gadgets; most technologically accurate thing I probably have is my PC which I got from Sam’s last year. I live in an apartment and everything in there either was given to me or I got from Wal-mart. The most expensive furniture I own is a dresser I brought from Big Lots for $85. I don’t have any knick knacks or artwork. Don’t have an IPod or a fancy cell phone. No flat screens or plasma televisions – all 3 of my televisions were given to me – one doesn’t even have a remote and I’m too cheap to buy a universal one

Honestly, I’m not really all that big on possessions. I’ve totaled two cars and lost a lot of items due to water damage from hurricanes. Plus I’m young and not really settled yet, so maybe I just haven’t reached the point where I feel the need to decorate. I’d rather spend my money on things that can’t be lost – like taking my Mom on a trip or taking my son to Disney or just putting in my savings account. The day my savings balance went over $1000 was one of the happiest days of my life because I’d only been putting $25 - $50 in it when I could, so that 1K mark made me feel like a millionaire.

Okay, completely off subject here – sorry I’m an anecdotal person and I like to talk.

[lobodog]

Cheap oil, loose lending practices and falling home prices could be major contributing factors to the big-box bubble bust. A question that begs to be asked is, why were they not seen in the business models? Or were they? Commissions were paid at all high financial levels.Since much of the real industries have been hollowed out in the U.S.and pseudo-industries have replaced them,a Pandora's Box of commission-based bubble schemes has been opened. The dominoes are beginning to fall!

[nat_at772]

Originally Posted by lobodog

Cheap oil, loose lending practices and falling home prices could be major contributing factors to the big-box bubble bust. A question that begs to be asked is, why were they not seen in the business models? Or were they? Commissions were paid at all high financial levels.Since much of the real industries have been hollowed out in the U.S.and pseudo-industries have replaced them,a Pandora's Box of commission-based bubble schemes has been opened. The dominoes are beginning to fall!

You would think that there would be some kind of stipulation for these big box stores when they close that they need to tear down the store and plant some grass or something. There’s a abandoned Winn Dixie about two blocks away from my old apartment complex; not only is it an eyesore because it’s covered in graffiti and all the windows have been busted but it’s a breeding ground for all sorts of problems. In the beginning it was just homeless people and kids looking for places to skate, but now there’s drugs, suspected gang activity, etc.