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The Death Cycle In Retailing

The Death Cycle In Retailing. Emily Burrill Lauren Edison Lori Van Metre. Overview of “The Death Cycle”. “ The death cycle of retailing is a series of events which, if not caught and corrected in time, will cause the financial demise of a company as surely as the sun rises in the East.”

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The Death Cycle In Retailing

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  1. The Death Cycle In Retailing Emily Burrill Lauren Edison Lori Van Metre

  2. Overview of “The Death Cycle” • “The death cycle of retailing is a series of events which, if not caught and corrected in time, will cause the financial demise of a company as surely as the sun rises in the East.” • Domino Effect

  3. Why does it happen? • Usually starts as a result of buying more merchandise than the company can sell profitably. • Invoices remain unpaid; vendors won’t ship new merchandise until they are paid • Unpaid invoices wreak havoc on retailer’s credit history • Retailer must borrow more money from the bank, often at a higher rate of interest (increased risk) • Bank eventually calls up loan • Retailer must liquidate, and business fails

  4. How does it happen? • Owner becomes frantic; short-term decisions • Circuit City • The Gap • Key employees leave • Record keeping inefficiencies • Valuable time is wasted by owner/manager • Bank issues/audits required • Deliveries of stock slow down; payments are not current • More employees leave

  5. How does it happen? • Vital work goes undone • Chaos has set in • Advertising expenses are cut • Gap commercial • Sales continue to fall • Management loses confidence

  6. How can it be prevented? • Effective retail reporting system • Keeping key employees from leaving • Better management of time and talent • Better management information system • “Big picture” thinking

  7. Sources used • “The Death Cycle in Retailing”. http://ezinearticles.com/?The-Death-Cycle-In-Retailing&id=555986 • Gap Ad—Claire Danes http://www.youtube.com/watch?v=pmKacuH_xOU • “Circuit City Under Fire” http://www.hreonline.com/HRE/story.jsp?storyId=11044839 • “Gap Inc. Seen Eyeing Job Cuts” http://money.cnn.com/2007/05/02/news/companies/gap_layoffs/index.htm

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