retail industry

Retail industry affected by war?

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Retail stores whether the big chain ones or the small corner stores, have become the lifeblood of any economy in the world. Its been this way ever since man found a way to use money in exchange of goods. Retailing has existed even in ancient times in one form or another. Once we invented money to compensate for the inefficiency of barter trading, retail has come to life as more entrepreneurial souls began to sell clothes, apples, and weapons to those who are more interested in pursuing other crafts.

Retail made people more social and less self-sufficient for their daily needs, as they didn’t need to grow their own potatoes anymore because they could get them from the public market.

In the United States alone, the retail industry has its footprints marked on every sector of its social economy. Retail contributes 17 million jobs, while 10 million more non-retail employments rely on this industry to exists. Right now the retail industry generates $3.8 trillion dollars in sales.

Retail is a big indicator of consumer confidence.2 When retailer sales go up, it indicates that consumers have a strong confidence in the economy and are willing to spend. But when sales are down, it gives off a big signal that the economy is in trouble. A domino effect ensures whenever retail figures plummet. Job cuts in the industry ensue, lower taxes are paid, and less business is generated with other establishments like the print and energy industries.

The everyday life of an ordinary American is affected a lot by retail. Small trips to the grocery store or large chains are the usual destination for those who need to stack up on necessities. These are also the go to places for those who need a dose of retail therapy after going through the week long grind at work.

These establishments are also a source of pride for a community, as these stores become a symbol of hope when the local people need a jobs or need to do business. They provide a sense of local history. Older folks remember what they used to buy there and what these stores used to look like during their heydays.

Retailers also mark the seasons of life. When a child starts school, it begins a round of trips to the retail store for shoes and clothes. Thanksgiving is a time to buy food to enjoy a great dinner with the family, while Christmas brings in happy albeit stressed out shoppers preparing for the holiday cheer. 3

Now, imagine closing every store… yes even that little shop at the corner of your street, unannounced. A reaction this public crisis and mass hysteria will follow. What if your local retail store was non-operational for a month?

If retail markets are cut off it brings drastic changes and suffering to a community anywhere in the world, for example: In Zamboanga City of the Philippines, rebels attacked scaring retail store owners into closing shop for days. Two things resulted from this crisis. Whenever the stores open for a brief time to serve the people, they experienced shortage of goods as consumers panicked and bought more than they needed, while other retailers hardly got any business since most were still afraid to get out of their homes.

In the United States, President Barack Obama and the US Congress are contemplating on attacking Syria. Syria has been embroiled in a civil war and accusations of using chemical weapons are being hurled on both sides of the conflict. The Obama administration is concerned about evidences that the Syrian government has used chemical weapons against innocent civilians and a humanitarian and regional crisis could ensue. This is the reason why we are now in the brink of another Middle East related conflict which could involve American troops or resources.

Now what does the Syrian war got to do with the retail industry? Historically, the retail industry does not respond well initially to wars. In the 1991 Gulf War, retail sales of video products plummeted as Americans were glued to the news consuming anything related to the conflict. 5 When the Iraq war of 2003 started, retail businesses either saw stagnant sales and even a downright slowdown due to plummeting consumer confidence.

While there is evidence that wars dampen consumer confidence and thereby result into a slowdown of retail sales, there are those who argue that wars are actually better for the economy. Some say that wars increase manufacturing activity induced by government needs and thereby increase job opportunities and spending. But others argue that the United States was able to get out of the Great Depression because of the renewed artificial economic activity of World War II.

Production of war necessities, like war related items, were needed during that time. When the war was over these production facilities were used to produce everyday needs like kitchen gadgets and these stimulated the economy as it generated additional income and thereby increased spending which benefited retail stores.

Would the US going to war with Syria be good for the retail industry? The world of the 1940’s which made war as a boost to the economy is totally different from our present situation. The US is now deep in trillion dollar debt. With this present situation will it still be able to stimulate the economy like World War II? Or would the Obama administration want to pump in money into the economy to sustain the war? It is presumed that it has enough firepower to contain a country like Syria. It will be a different matter though once other players in the Middle East and even Russia join the conflict.

In the meantime, retailers will have to do with sitting on pins and needles as it hopes to continue ringing the cash register.

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