Tuesday, October 6, 2009

In a recession, most businesses are losers, but whose winning?

Amazon. (Revenue increase: 38 percent.) This premier online retailer is gaining from the pain at the mall. While overall retail spending has fallen, online sales have kept growing, as thrifty consumers search for the lowest price on the Web and even try to save gas money by shopping from home.

O'Reilly Automotive: All those owners holding on to aging cars need more parts and service than ever. O'Reilly sells fan belts, alternators, headlights, and other components to two sets of customers: professional installers and at-home tinkerers who work on their own cars. The balance positions O'Reilly to benefit from a turbulent market in which thousands of Chrysler and General Motors dealers are shutting down and dispersing their maintenance business.

SHOOT: If you're cheap, and you can fix things, you'll survive these times.
clipped from finance.yahoo.com

A trip through the mall tells the story: The recession of the past two years has devastated the retail industry, as overspent consumers have put away their credit cards, started paying off years of debt, and put the kibosh on shopping.

So far, the victims include bankrupt chains like Dial-a-Mattress, Filene's Basement, KB Toys, Circuit City, Mervyn's, Steve & Barry's, and Linens 'n Things, plus hundreds of smaller retail outlets. Vacancy rates at shopping malls have been shooting up, and 10 percent of malls might even close, by some estimates. The pain could continue for another year or longer, as unemployment keeps rising and shoppers scrimp.

Once the economy recovers, these retailers will enjoy a competitive position that has become significantly stronger over the past two years:
Aaron's. (Revenue increase since 2007: 21 percent.) This rent-to-own furniture chain has been aggressively expanding and buying up competitors, aided by an economy that favors its business model.
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