Monday, September 1, 2008

Planning for fall and winter.

Once again, for the sake of my own business planning, I'm going to be making some informed (wild-assed) estimates (guesses) on the business climate in Bend.

I have no other information than my own sales figures (navel gazing) and experience.

I suspect that sales in Bend, overall, are probably down 10% to 30% or more from the peak. Let's average it out at 20%. At least, that's where I would've been if I hadn't added new books and new games.

Of course, some stores probably aren't seeing a downturn at all, some are probably actually seeing an increase, some are probably sucking eggs. But, overall, I think a 20% estimate isn't probably far off. At least for established stores. For new stores -- well, they don't even have figures to compare, do they?

Second question. How long will this last?

I'm betting anywhere from 2 to 5 years from now. So, we'll probably see a further decrease in sales for at least a year or two.

Meanwhile, Bend has so much momentum, retail-wise, that I think we'll see stores popping up all through that period.

How are others going to handle it?

Some will have the ability to handle a 20% decrease, but not the motivation. Some will have the motivation, but not the ability.

If that 20% becomes 25%, the formula changes again. Some new stores won't even know what they're missing, (lucky or unlucky?) though they might fall short of projections. Still, downtown Bend is such a high-end location anymore that I'm going to assume most new businesses have some capital to back them up.

Small business is hard even when the business climate is good. On the other hand, I've always maintained that new businesses can last 2 or 3 years even when they're bleeding red, and there are so many businesses in that time frame that we're unlikely to see a collapse.

At least, not one that is noticeable. Bend has a very high churn rate. I suspect that when a business vacates downtown Klamath Falls or Baker City, it has a noticeable impact. In Bend? Not so much.

Ironically, it is the older more experienced businesses that seem to quit first. Both because they know that things are unlikely to turn around any time soon (and like I said, they know business is hard even when times are good.) And because they have a weakened immune system.

As I've said before, many stores can survive, but at a weakened state, which is a dangerous place to be. I don't expect a major downturn from here, but it could happen, and that's when the weakened state starts to become a deciding factor.

Any way you slice it, though, it will be a long slow process, muddled by the continued opening of news stores. It's unlikely that lease rates will decline any time soon. I'm going to continue to hunker down, just in case.

1 comment:

BENDBUST said...

On the subject of seasoned 'collapse'. I talked extensively with Marz folk and Hans when they shutdown. Both instances were about the 'competition'.

When you have tons of newbies enter a field, and willing to lose massive money on $1 happy-hour give-aways the first N years to build the biz, it kills those old timers, that have the loyal clients.

The above is food, but imagine 2 or 3 new book-shops in Bend, all started by housewives where hubby tossed her a $200k and said, go start a biz, they would build an inventory, and give-away the books at prices less than COSTCO/WALMART to build traffic.

But what of established old-time biz, that had no sugar-daddy? How do they compete? They cannot, and thus they see it coming they sell and/or fold.

For me Marz & Hans were the two best places to eat for the past years in Bend. Consistent, good value food, when you ate out. Pleasant staff.

Yet, the owners didn't want to compete with dozens of desperate idiots giving away product, which causes the few people who eat out to all expect something for nothing.

There is still a lot of money in Bend, as things get slow, people will lease retail space and try to get a 'cash-flow', almost all will fail, most interesting is those who throw aways $100k-$500k are actually destroying old established businesses.

To diverge for a moment, lets talk about small villages in Italy, there is one bakery, one tabacceria ( which is smoke & stamps ), ... The same family will have ran the bakery for generations. It's virtually impossible to start a biz, unless its a new gig, or you inherit the property, or unless your rich.

A sad fact of US consumerism, and retail is the ease of which LEMMING's can create competition, which quickly destroys everything. This is why today we have NO downtown Hardware store. You want HW, you have to drive to hell North of Bend ( costco/lowes ), sure there is a few things at A-Boy, but its all low end.

So we have these boom&bust business cycles where we either have too many or none at all. Obviously dunc's survival is one of starvation, and being plain ornery.

Lastly there is the private ticket writing outfit that is on a roll to condition locals to NEVER drive downtown. I see lots of plywood in Bends downtown future.