Entrepreneurship & Small Business

Will retail and wholesale trade bounce back when the economy does?

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  • Sep 26th, 2012 11:51 am
[OP]
Jr. Member
Jan 23, 2012
142 posts
19 upvotes
Mississauga, Canada

Will retail and wholesale trade bounce back when the economy does?

I deal with wholesalers mainly and most of them are hurting right now. Sales are down, several have shut down, and its been like this for the last 3 years or so. Wholesalers get hurt when their customers, retailers, are hurting. And I'm assuming the same thing is happening at that level.

What I'm wondering is if this is directly related to the economy. If it is, then we could assume that once the economy gets better, retail and wholesale trade will also come back to pre-recession levels.

Or do you think that the trade landscape has changed so much, that traditional retail/wholesale is dying out, and that even a better economy can't save them.
9 replies
Jr. Member
User avatar
Dec 15, 2011
152 posts
14 upvotes
Toronto
It all depends on what type of business you're talking about & if it is secular or cyclical.
Deal Addict
Aug 28, 2007
2035 posts
410 upvotes
Calgary
Yes it is linked to the economy; so they will recover as the economy recovers.

However the use of the word "bounce" may be a bit exuberant. In the past, I have said all recessions are the same, but this time, we seem to be in something different - a mixed mess; part boom - part recession. Maybe we won't have a bounce but instead a long slow painful rise from the depths over a decade or two... essentially your entire generation.

As an always optimistic entrepreneur I don't want to be a party pooper or Chicken Little saying the sky is falling but I have been ruminating about the following "negative" topics lately.

What if the basic tenet of economics (that we must have continuous growth) is fundmentally wrong for a world of finite resources?

What if the demographic shift of my baby boom generation bulge dying off causes a decrease in demand for certain commodities and services (in western democracies), and the next generation doesn't want to play my generations' dream?

I'm particularly concerned when it comes to the price of single family homes in the burbs. If my kid's generation says "No, we don't want to buy your house" then what does that mean to the worth of suburban real estate, on which the bulk of my generation has hung the entire asset side of their net worth?

What if the the cost of petroleum reaches unsustainable costs for a normal working dude or dudette to continue commuting from the tupperware neighbourhoods? We've only been burning the stuff for 150 years or so and we've used up the cheap and easy half. The next half will not be cheap or easy to find... and with consumption on an inexorable upward trend it won't take us 150 years to burn the last barrel. There will be a point we can't afford to burn the stuff.

What if the severely credit challenged North American or European (or their respective governments for that matter) just can't continue buying "stuff" without a way to eventually pay for it?

Humans have only been on the planet for a few million years. And there is no rule we won't exterminate ourselves. In a recent example, we continued increasing quotas right up until we fished out the last Northern Cod. Sometimes we're not the brightest bulbs in the pacakage. And our political leadership seems specifically incapable of making a decision with the best interests of the population at heart. All ideology and no reasoned thought.

Well that ought to be enough to ruin your day.
Banned
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Feb 15, 2008
26318 posts
3234 upvotes
Calgary
Probably not to the extent you're lookin for. The past decade has been characterized by a lot of consumer consumption growth. The next decade is likely to be about capital goods formation, infrastructure revitalization, etc., which tends to involve a far more limited cross-section of the population.
Deal Addict
Oct 29, 2010
4362 posts
697 upvotes
I'm in the service industry and we have seen some huge movements. Last year it was profitable most of the months but this year it has gone downhill. I have seen declines in revenue pretty much every month this year and during this August i have seen the biggest decline i have ever seen. In August of 2011 i had a revenue of 110k. In this year's August i had a revenue of 40k!
If you take into account the fact that nothing much changed on my end, that is a really big concern for me. Keep in mind that the more revenue the more expenses too.
I'm wondering if it's connected to the real estate market which is pretty much frozen right now. A good friend of mine who is a very good real estate agent told me he didn't sell a house for 3 months now. It's pretty dead right now.
[OP]
Jr. Member
Jan 23, 2012
142 posts
19 upvotes
Mississauga, Canada
Mark77 wrote: Probably not to the extent you're lookin for. The past decade has been characterized by a lot of consumer consumption growth. The next decade is likely to be about capital goods formation, infrastructure revitalization, etc., which tends to involve a far more limited cross-section of the population.
I never thought about this before. But I agree about decreased consumer consumption, as we shift our consumer culture mind-set to less materialism.
[OP]
Jr. Member
Jan 23, 2012
142 posts
19 upvotes
Mississauga, Canada
Squageli wrote: It all depends on what type of business you're talking about & if it is secular or cyclical.
What do you mean exactly? I would think that year over year, the results would be generally the same.
[OP]
Jr. Member
Jan 23, 2012
142 posts
19 upvotes
Mississauga, Canada
Just Confused wrote: Yes it is linked to the economy; so they will recover as the economy recovers.

However the use of the word "bounce" may be a bit exuberant. In the past, I have said all recessions are the same, but this time, we seem to be in something different - a mixed mess; part boom - part recession. Maybe we won't have a bounce but instead a long slow painful rise from the depths over a decade or two... essentially your entire generation.

As an always optimistic entrepreneur I don't want to be a party pooper or Chicken Little saying the sky is falling but I have been ruminating about the following "negative" topics lately.

What if the basic tenet of economics (that we must have continuous growth) is fundmentally wrong for a world of finite resources?

What if the demographic shift of my baby boom generation bulge dying off causes a decrease in demand for certain commodities and services (in western democracies), and the next generation doesn't want to play my generations' dream?

I'm particularly concerned when it comes to the price of single family homes in the burbs. If my kid's generation says "No, we don't want to buy your house" then what does that mean to the worth of suburban real estate, on which the bulk of my generation has hung the entire asset side of their net worth?

What if the the cost of petroleum reaches unsustainable costs for a normal working dude or dudette to continue commuting from the tupperware neighbourhoods? We've only been burning the stuff for 150 years or so and we've used up the cheap and easy half. The next half will not be cheap or easy to find... and with consumption on an inexorable upward trend it won't take us 150 years to burn the last barrel. There will be a point we can't afford to burn the stuff.

What if the severely credit challenged North American or European (or their respective governments for that matter) just can't continue buying "stuff" without a way to eventually pay for it?

Humans have only been on the planet for a few million years. And there is no rule we won't exterminate ourselves. In a recent example, we continued increasing quotas right up until we fished out the last Northern Cod. Sometimes we're not the brightest bulbs in the pacakage. And our political leadership seems specifically incapable of making a decision with the best interests of the population at heart. All ideology and no reasoned thought.

Well that ought to be enough to ruin your day.
Yes, that ruined my day - lol. But I think the next generation will buy less and the trend is going back to the old days. Practicality and naturalness. I think the hyper materialism generation is coming to an end.
Deal Addict
Oct 29, 2010
4362 posts
697 upvotes
sguptaet wrote: Yes, that ruined my day - lol. But I think the next generation will buy less and the trend is going back to the old days. Practicality and naturalness. I think the hyper materialism generation is coming to an end.
I somehow doubt it.
Years ago, a poor family would have nothing. Today, a poor family has plasmas, iphones for the entire family with overly priced Rogers plans.
There are lots of turbulences in the world economy that cause huge shifts all the time. You also need to remember that China and Inda both in a situation where they need double digit growth every year just to avoid revolution. Which is hard to sustain over a long period of time.
Jr. Member
User avatar
Dec 15, 2011
152 posts
14 upvotes
Toronto
sguptaet wrote: What do you mean exactly? I would think that year over year, the results would be generally the same.
A company is cyclical if it needs a strong economy in order to perform well. Secular, on the other hand, refers to companies whose growth remains consistent regardless of the economy. So a frozen food business such as M&M Meat Shops would be cyclical and a coal business would be secular. With a secular business you would also see peeks and valleys in sales. Determining which category your business falls in to should shed some light on its future. But some business are the "sunset" type which just wither away like typewriters did.

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