Retail glut compared to housing bubble

America has too many retail stores lately, as consumers are doing more and more of their shopping online.  One retail CEO has compared the state of retail today to the housing bubble of the mid-2000s that led to the Great Recession.

George Kelemen, president and CEO of the Texas Retailers Association, takes a different view, calling such a comparison “hyperbolic.”  “Is there concern, given a lot of bankruptcies, or companies, retailers, especially some of the larger ones, being in some financial distress recently?” he asks rhetorically.  “Yeah, absolutely that’s a concern.”

But Kelemen says it’s “simplistic” to compare the situation to the housing bubble, which “had a lot to do with financing and speculation and all sorts of other issues that were beyond simply too much housing.”  Right now, he says, there are just too many stores, and there are other reasons for that.

One of these, he points out, is mergers of major retailers.  “As a result of consolidation, you see companies adjusting,” he says.  “And sometimes that means closing stores that aren’t performing, or closing stores in areas where they don’t feel like they’ve got a good business.”

Another factor is competition from online commerce, including the giant, Amazon.  The question is: “How are you, as a company, balancing your traditional brick-and-mortar storefronts, and your traditional stores, with an online presence?”  Walmart and other companies are doing well in this regard, which Kelemen says involves more than just setting up a Web site. He says a company’s use of social media and email can help build customer loyalty.

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