How sane is it that to survive retail makes us insane?

I only noticed this yesterday, but Mervyn’s is closing in the Mall. This was announced as far back as January at the Seattle Post-Intelligencer: Layoff Tracker.

Mervyns LLC said Monday that it will close 20 stores — including all 13 in Washington — by next year, affecting more than 1,400 positions, as the struggling retailer aims to improve its profits.

The last paragraph offers the tidbit that Mervyn’s was owned by Target, but sold off. Major retail brands being owned by the same actual company. Another case of the disease in the detergent aisle: the appearance of choice, but no real choice. The appearance of competition, but no real competition. Oh, what tangled webs corporations weave, when they practice branding to deceive:

Mervyns has been steadily losing market share to more nimble competitors for years. Frustrated with the chain’s meager returns, Target Corp. sold Mervyns last year for $1.65 billion to a group of investors that includes Sun Capital Partners Inc., Cerberus Capital Management LP and Lubert-Adler and Klaff Partners LP.

I can’t help but wonder what this means for the other stores in the “shoppolis” (to try and coin a new word: shop-city, the artificial towns comprised of retail and little or no residential buildings.). So many retail companies rely on the holiday season to make money. My understanding, from many years ago, was that if a retail company didn’t make money during the holiday season they simply did not make money for the year.

This is shocking to realize. Not only does this mean that the rest of the year is a loss-leader to get people to shop with some kind of brand loyalty during the holiday, but it also means that normal, everyday purchasing of goods is not enough to sustain retail businesses. If people shopped as they normally do every other day of the year during the holidays then the retail economy would collapse. That means that the success of retail requires that people behave as if they are insane for months of the year. How sane is that?

And, that insanity is the fuel that makes the engine run. Without that fuel, there would be rolling blackouts in the Shoppolis.

But what happens when Mervyn’s goes out of business and is selling everything, even the fixtures? Will this be a gravity well for consumers seeking cheap goods for the holidays? If Mervyn’s sucks up money that would have gone to making the year for other stores, then other stores in the mall may not survive the collapse of Mervyn’s.

And, here’s a funny twist: while retail requires us to be insane, we have to be consistently insane. From The curious economics of temptation. – By Tim Harford – Slate Magazine:

Mainstream economics has no way to describe Frances’ behavior, because it assumes people are impatient in a consistent way

(I just had a moment of self-doubt about whether it was Mervyn’s or Mervyns, but find that I’m comfortably old school with the name.)