Why Retail Outlets are Closing Down in New York City
New York City is ranked among the top international shopping destinations in the world. The City’s economy is driven by its retail industry due to a high number of outlets where it is ranked among the top 20 largest economies if it were a country by itself. However, all is not well in the retail industry. In fact, quite a significant number of the retail outlets are closing down, leaving a big question about the viability of these businesses in other areas of the world if they could not do well in New York. Therefore, it is critical to focus on the retail outlets that are closing down, why they are going out of business, and what they would have done to stay in the industry.
According to Farfan (2016), Scoop NYC is one of the largest retailers that went out of business in 2016. The outlet has been in business for 20 years, offering a high-end designer clothing. The store has cited various reasons for its decision to close operations in New York. Firstly, the store has hired a large floor and cannot keep up with the rising rents (Meltzer, 2016). As such, the business cannot meet the store’s cost of operating and maintaining. Secondly, they claim there has been increased e-commerce competition from other brands and the larger stores, who offer their clothes at a lower price (Curan, 2016). Lastly, the brands once sold by Scoop NYC have grown, and now they are opening their stores or moving their products to the larger outlets. The new outlets have imitated Scoop’s way of doing business, bringing fierce competition in the industry.
However, the management should have taken various steps to stay in business. Firstly, they would have bought a floor to avoid the rent expenditures. Moreover, the management would have negotiated favorable rental rates that would sustain the business and allow profit-making. Secondly, since the store had already made a name for itself, they would have come up with their own brand and unique designs, which would have kept their royal customers. Thirdly, Scoop would have invested more in e-commerce and developed new marketing strategies to reach more potential customers. Fourthly, Scoop NYC would have innovated new ways to keep up with the competition that, includes re-branding and offering better customer service (Meltzer, 2016). Lastly, to keep up with the high cost of operation, the management would have reduced the number of employees, thus cutting on the recurring expenditure.
Bolton (2016) affirms that Teavana is another large retail outlet that is closing down business in the City of New York. Teavana is beverage outlet owned by Starbucks, a coffee retailer giant in the United States. In 2015, the retail outlet generated a total of $1 billion in sales, making it unclear why they decided to close down operations. The business was doing well since there were plans to open new outlets in India and the Middle East. However, the management has cited high rent rates as one of the reasons for closing the outlets. The revenue generated by the outlet is not enough to cater for the rent and operation cost. Another reason was that the retail business heavily depends on returning customers, and most were not returning. In addition, the managers cited fierce competition that made the business not to thrive as expected (Curan, 2016). The business location, especially in Chicago, lacked visibility, thereby making it hard to access. Lastly, the tea bar concept lacked creativity and innovation as most people expected that Teavana would offer something unique, but they did not meet the customers’ expectations.
The Teavana tea bar was not badly off, and instead of closing operations, the management would have taken various actions to ensure they remain relevant in the market. Firstly, they would have invested in marketing; hence, creating awareness to the people and making them understand the business and the tea bar concept. Secondly, Teavana would have made innovations in their products and offer something unique from their competitors to create a market for their unique products (Bolton, 2016). Thirdly, they would have done market research on the customer needs to meet the client’s expectations. Finally, the outlets should have been established in locations that were visible where their potential customers and the existing ones can easily access them.
The advice that I would offer them is that in businesses, there are vicissitudes and when faced with challenges they should devise ways to overcome those challenges. Closing down the business should be a last resort. Additionally, it is very important to have a futurist in business that will be able to foretell the upcoming issues related to the business. The futurist will play a significant role in advising the management of the steps to take to avoid closing down a business and necessary adjustments to make to remain significant.
In conclusion, it has been noted that New York is an international destination for shoppers where the City’s economy thrive on the retail activities. However, the businesses are faced with a threat of closure, as it is evident that significant numbers of businesses have shut down their operations, citing high rent rates as one of the common challenges retailers face. By and large, the challenges faced by the businesses can be overcome through various steps, as has been discussed above.
Barbara Farfan (2016). New York 2016 store closings, going out of business scales NY Locations. The Balance. Retrieved from https://www.thebalance.com/new-york-store-closings-2892741
Catherine Curan (2016) Retailer closing faster than you think. New York Post. Retrieved from http://nypost.com/2016/07/02/retailers-are-closing-faster-than-you-think/
Dan Bolton (2016). Why Starbucks is closing its Teavana tea bars. World Tea News. Retrieved from http://worldteanews.com/insights/industry-insight/why-starbucks-is-closing-its-teavana-tea-bars
Marisa Meltzer (2016). The last days of scoop. The New York Times. Retrieved from http://www.nytimes.com/2016/05/19/fashion/scoop-nyc-boutique-closing.html?_r=0