Friday 20 September 2013

Fall of Retail

 I took Carillion Blvd and drove into Carnegie Center Blvd, I had few seconds to decide before I would be at the traffic junction whether to take right turn on US 1 North or left turn to be on US 1 South. Couple of miles on North would take me to Wegmans and Wal-Mart whereas South would take me to Superfresh about five miles away.

US1 - Expway in US

I stayed in left lane to head towards North. I was waiting for the signal, the traffic on US 1 was moderate and impressed me with lots of new cars zooming past the crossing. I felt auto industry was not in that bad shape in US. I turned left and was comfortable driving in the center lane for another 2 ½ miles before I took the Scudders Mill exit. On my right I saw the Princeton Health Center. It was under construction when I visited Princeton a few years back. I was impressed to see widening of Campus Road at next traffic signal to facilitate smooth flow of traffic towards the health center. After driving for a mile and a half I was at Schalks Crossing, I slowed down the car and took free right turn at the signal, crossed USPS (post office) took a right to park my car near McD. I had a surprise in store, the McD was almost gone, couldn't be easily noticed, may be they were doing well but from outside it wasn't prominent as we find it in India. In stead some Mexican joint was more prominent. Anyway I parked my car there and decided to move around.

The place looked so familiar even after little over three years. I could make out in a glance that the Block Busters is gone and Pet shop has come in its place. Block Busters was in keen competition with Netflix. I would frequently visit Block Buster to rent a DVD and to drop back in the box. I felt sad to see the Block Busters go. 
No more CDs, DVDs on rent
In any case recession was not the reason for its closure. It was the technological advancement that had taken the toll of an established business. Online availability of movies and serials, Apple TV, free downloads, iPhones, smartphones etc. all had forced the closure of Block Busters. The changes in technology can impact business and result in zero sum game. Pet shop replacing Block Busters indicated surplus money available to spend on pets in American society. The CVS pharmacy around the corner was still going strong. I proceeded towards the Superfresh and on way found a photo processing lab run by Chinese had downed its shutters. Again it was the technology to blame. The photographic business was not the same after the advent of digital photography. The next door Hallmark was also gone. Blame it again to the technology, social networking eliminating the need of a physical greeting cards. I moved further. The dollar shop of a Pakistani was gone, Dunkin Donuts had its usual clientèle  wine shop run by an Indian was doing better, NYSC gym was replaced by another gym perhaps the change of franchiser. Indian restaurant had a new management and double the space. All looked well. As I came near the Superfresh, I was in for a surprise. Superfresh was closed.
In front of empty corridors where Superfresh existed

Chill ran down my spine. How could it be? I asked a question to myself. The store was apparently doing well when I visited last. I could easily compare it to Shoprite in terms of its size and services. Right from fresh vegetable and fruits section to Parmacy, Superfresh had everything. In fact fresh vegetables and fruits section and its Pharmacy were better than many other similar supermarkets. The salad bar and ready to eat food area with multi cuisine menu was a treat for working executives in the neighbourhood of Plainsboro and College Road. I just couldn’t imagine that it was all gone. Superfresh belonged to A&P group, a leading company in US. The company was in expansion mode till mid 2008, acquiring Pathmark. But it announced closure of its outlets from early 2011 and the Plainsboro Superfresh was closed on Nov 14th 2012. Competition may not be the reason for the closure. There was no competitor for Superfresh in radius of nearly eight miles. The nearest competitor was Wal-Mart, Wegman’s, Shoprite all of them close to each other. They should have been the one who would feel the heat of competition. It was Kmart that had similar fate like Superfresh few years back. Was recession the reason for Superfresh closure. I personally feel not.

My mind went back to India, Navi Mumbai in particular, the place where I stay. I have seen organized retail closing down. For a change the government policies were not much responsible for such closures. There have been hundreds of hurdles for FDI in retail. The single brand, multi brand has been topic of discussion for politicians. Similarly 100% investment by foreign player was also adequately debated. Many hurdles were created right from city selection based upon population to state government approval. No worthwhile investments have come in this sector. The death of organized retail in India was of Indian companies. Business decision based largely on political situation was seen in UP. Reilance took decision to shut the business there. Strategic decisions going wrong started with Subhiksha. Others did similar mistakes sooner or later. I have seen in my locality closure of few outlets of More, Fairprice, Spinach, Foodland to name a few. In the recent past More mega stores was also closed. In Navi Mumbai two major attractions of yesteryears, Palm Beach Galleria and City Center met an early death. There was a time when these places were responsible for traffic snarls and jams in the area. That was the rush these places attracted. Center One, the first of its kind in Navi Mumbai and the still half vacant Raghuleela Mall are struggling for their survival. All these resulted in loss of thousands of jobs. At the same time the “Gupta Stores” around the corner is flourishing. How do we explain this? No real FDI has come but the retail crumpled and what crumpled was Indian organized sector. And all this happened when the Indian economy was growing better that US economy and was perhaps the second best after China in the world. Explanation for this is too complex.

I shifted my thoughts from India to US and went back to my car. I drove to Nassau Blvd on US1 that had Wal-Mart, Target, Wegmans. All of these were all doing well. A little away Comp USA, a leading computer hardware and software chain stores was replaced by Dollor Tree, but Best Buys selling computer hardware and software was doing well. Boarders, a leading book stores that would satisfy the hunger for knowledge was replaced by Buy Buy Baby a competitor for Babies ‘R’ Us and diversification of Bed, Bath and Beyond. I don’t know if closure of book stores should be blamed to e-books and technological advancement or surplus disposable income available to spend on children rather than buying books?

Parking lots are full even now
The food court in Market Fair has been replaced by high end sit in restaurants that results in increased customer spendings and these too are doing good business. Fortunately Barnes and Nobel is still there though at different location. For a person like me returning to US after over three years the business scenario is different. There is a certain shift in business, I don’t see any decline, parking lots are full, stores are crowded but where and how the money is being spent has undergone a change.


I have no answers for many questions and to the major question if these changes have any logical relation to recession? And will these lead to economic prosperity or downfall? Time will tell.