Over the last year or so, the United States of America has been in a recession. The state of our economy literally started free-falling during the Bush administration, but our new leader has not done much to help it. Because of this, people are losing jobs left and right, the national unemployment rate reached and stayed in double digits all year, and new jobs are rarely being created. This has in turn caused a lot of companies to go out of business. Just drive by any number of strip malls or shopping centers and you will see numerous stores no longer operating. Even across the street from me, in Fishers, Indiana, you will find three stores that have gone out of business just this year. In one of those locations a restaurant opened and was closed in just a few months.
But its not just small businesses suffering from this, larger businesses are as well. Even some major corporations are laying off workers left and right. If you have not done so already, I highly recommend you watch Michael Moore’s new film. It’s called Capitalism: A Love Story and starts by taking a look at General Motors. Even recently, GM has suffered some major downturns and had to be bailed out by our government to stay afloat. Sure, it saved a bunch of jobs, but was it worth it?
Moving on, there are several other companies that might be closing their doors this year. I wanted to take a look at some of those places and talk about why I feel—outside of the struggling economy—these places are going out of business. It’s progress, if you ask me, and I look forward to seeing where we go from here.
Guess who just filed for bankruptcy? Reader’s Digest used to be one of the most widely read publications on the market, but now has suffered a major downturn in sales. In the US alone, some 5.5 million people subscribe to this magazine. But when they filed for Chapter 11 bankruptcy, they made a few more changes to the magazine. They cut back on writers and moved from twelve issues a year to only ten in hopes of cutting costs.
But why are they going under? If you take their overseas numbers into effect, they are still the world’s number one most-read publication. But that’s not enough. They need sales here in the states to be able to survive. This is a similar situation to what The New York Times is going through. They have cut paper production in half, and are now charging for access to certain content online. Bingo. I said it. Online.
These magazines, not just Reader’s Digest and The New York Times, need to realize that the way people get their news is changing. We don’t wake up, grab the paper, and take an hour to sip our morning coffee and read what happened yesterday. We grab our smart phones, check our news feed, and then head out the door. We are reading our information on a screen, not on paper.
This is also a big change for journalists. The days of going out, researching a story, and sending a great news article to press are quickly dying. The sooner these magazines realize that this is happening, the better. Look at The New York Times. Sure, you have to pay for access to most of the juicy stuff, but it’s the same difference as paying for a newspaper at the gas station.
I have written about this a time or two and am by no means surprised by this one. Blockbuster was once the leader in movie rentals. As a matter of fact, they led rentals for over two decades. For a while there in the mid to late nineties, you could find a Blockbuster on every street corner. Think modern day Starbucks. But they are no longer doing so hot, again, thanks to the Internet.
So how bad is Blockbuster doing these days? Well, how bad does losing $65 million sound? Pretty bad, right? Well, they lost that last quarter alone. With services like Netflix and Redbox popping up, and with the increased rates coming from Blockbuster, people are starting to rent less.
I honestly can’t tell you the last time I rented a movie from Blockbuster. Blockbuster doesn’t just rent movies, though. They also rent video games for the leading game consoles. But when they cost about $8-$10 for a week, it starts to lose its luster. And like Netflix with movies, Gamefly covers the video game rentals. You can rent video games from Gamefly for a much lower rate than renting them at Blockbuster. That, and there are no late fees with Gamefly. Of course, Blockbuster claims they have no late fees, but you need to read the fine print because that is not always true.
Blockbuster is not the only movie rental place out there. Movie Gallery is actually Blockbuster’s biggest competitor. Well, was their biggest competitor anyway. Just last week they stated they will be closing all 2,400 of their stores. Looks like Blockbuster is next to go.
We all have cell phones now. I would like to know if anyone out there does not have a cell phone, actually. Even my eighty-five-year-old grandfather has a cell phone. And he uses it! Anyway, T-Mobile is actually owned by Deutsche Telekom. They are currently the fourth-largest cellular provider in the United States. But there are some big names in front of them. You have AT&T, Verizon, and Sprint-Nextel leading the pack. And with AT&T offering the iPhone and the success Verizon has seen with their new line of phones, third and fourth place just doesn’t seem to cut it these days.
They have been losing money, and subscribers, year after year. Last year they only made $308 million in sales. That might be a lot of money for folks like you and I, but to a huge corporation like that, especially in the top five biggest cellular providers on the market, that’s peanuts, if that. The only way that T-Mobile can stay in the market would be a merger with someone like Sprint-Nextel. It would give them a chance to save some jobs, and still be involved in the cell phone industry. Expect major movement in the next two years from these guys.
Do I really need to tell you why BP might be looking at closing its doors? Earlier this year there was an oil spill in the Gulf of Mexico. Actually, it was a large oil spill, one that is still going on to this day. And BP is responsible for it. BP stands for British Petroleum, and money is not why this company may fold. Money is actually the least of this company’s worries. Just last month they gave $20 billion to help fund the folks affected by this oil spill.
The brand is what has been compromised here. There are videos all over YouTube of people making fun of the spill, and actually making fun of their attempt to clean it up. It took about five attempts (public attempts anyway) for them to get it right. And then a few weeks later, it broke again. The best solution I heard actually came from a kid and his father who made a short film explaining their solution. Regardless, BP says they are doing their best to clean it up, but are still suffering from the mess.
People are avoiding the gas stations and refusing to use a BP station. There are protestors standing outside some of their locations, people striking—from the gas station to the clean up crews, and Twitter has even become ablaze because of a Twitter account basically making fun of BP and their efforts. I do think it’s funny that the false account has three times as many followers as the actual BP account does.
One thing that isn’t helping is their attempt to throw off the users. For instance, did you know that BP bought search criteria from Google? For a while, if you searched things like, “BP oil spill,” or, “BP clean up efforts” you wouldn’t get search results. You wouldn’t get blog posts talking about them or websites telling you how bad BP was. Nope, you would be redirected to their website. This is a technique used by major corporations to help drive traffic where they want traffic. There is a lot of work to be done here, and it seems BP is doing a good job at moving in the wrong direction.
I can’t believe they are still around. Stores like Best Buy, Fry’s Electronics, and even Walmart are way ahead of the game when it comes to electronics. I can’t walk into a Fry’s and not buy something. Best Buy has everything you need under one roof. Even their biggest competitor, Circuit City, closed its doors last year. I was actually employed by Circuit City for quite some time. I loved working there. But needless to say, they are no longer here and Best Buy gained a lot of that market share. (They are still operating stores in Canada.)
Just as BP is losing their brand, RadioShack is trying to regain theirs. They are actually going through a rebranding right now and are beginning to label themselves as “The Shack”. Not sure if it is going to work or not, but look for them to be closing their doors very soon.
(In recent news, Best Buy is looking at buying RadioShack. If that goes through, Best Buy will gain even more of the market share that it gained when Circuit City went under, and will then be starring ahead at Walmart. Although I am not sure anyone can compete with Walmart.)
As you can see, these are some fairly household names we have here. I am sure you have shopped at one or more of these places in the past and have spent some of your hard-earned money there. But that is no match for bigger companies that come in and take over that market share. I buy based on cash flow. So if I can get something for less elsewhere, then I am shopping there. That is why I love Walmart so much. Sure they might treat their workers like trash. But no one is forcing you to work there. It is a great business model, and it works.
If you work for one of these companies, beware. Times are changing and you might want to look at getting another job elsewhere. We are no longer living in a world where you get one job and work for forty years and then retire. We live in an ever-changing world of growth and progress. I look at all of this as just that. If RadioShack has to close for Best Buy to offer lower prices, then so be it. You can’t stand in the way of something like that, so why try? Embrace it and move forward.