An Analysis on Fast-Moving Consumer Goods and Sunset Industries
Covid-19 pandemic has hit the retail and consumer sectors hard, and many
well-known companies have been impacted worse than ever. Macy's has been
closing down its stores, while Zara is said to be closing as many as 2,000
stores. There are also a large number of well-known companies closed their
stores, such as J. Crew, a clothing retailer, which has filed for bankruptcy.
J. C. Penney, GNC, and others are also facing bankruptcy risks. Nordstrom also
announced that it will permanently close 16 stores nationwide. Neiman Marcus is a 113-year-old chain known for its
high-end department stores. Before the Covid-19 outbreak, the company had been
hit by online competitors, which put pressure on its cash flow. The Covid-19
outbreak in the U.S. exacerbated Neiman Marcus's problems, forcing it to lay
off 14,000 employees and close 43 stores.
than a dozen major retail companies in the U.S. have filed for bankruptcy, according to incomplete statistics by NBC. These retail
companies are among the leading companies in the department store,
entertainment, and clothing industries. Among them, there are two stores that
had been in existence for two centuries filing for bankruptcy, shocking the
industry as they survived two World Wars and several financial crises, but not
fact, Covid-19 only provides a starting point. The real problem is that these companies and industries were
struggling even before the pandemic. The enormous challenges they face, like mounting inventories,
debts, difficulties in financing, and high cost of capital, have sealed their
fate. The reason is that, geopolitics have revealed the risks to these firms
are not just the relocation of industries, but also the overproduction caused
by globalization, which is the biggest challenge facing companies and
industries. Industries such as fast-moving consumer goods (FMCG)
are obviously oversupplied and can be produced everywhere in the world. There
is nothing special about those products that can be
produced anywhere. Capital markets do not pay any attention to such products
and the industries, so they will naturally face difficulties and high costs in
point is that today's markets, especially the capital markets, focus on
entrepreneurs like Steve Jobs and Elon Musk, rather
than century-old businesses in conventional industries. Those century-old
stores, even if run with painstaking care like Japanese businesses, their
growth and vitality still can't compare with that of Elon Musk. Coupled with
global overproduction, it makes sense that the capital markets are more
reluctant to pay attention to these industries. Under this trend, it can be
judged that in the future, enterprises not favored by the capital is bound to
be more turbulent, the wave of enterprise failure will be even higher. This is due to globalization and overproduction, regardless of
the efforts pour in by the enterprise owners.
Does this spell the end of such enterprises?
Not at all.
are still opportunities for these enterprises and industries. The
overproduction caused by globalization makes production not a problem at all,
but what should be produced is the issue of concern. Steve Jobs grasped his
chance and made a difference in a crowded and seemingly competitive mobile
phone market. The extraordinary prosperity of the
Huaqiangbei market in Shenzhen in those days could fully prove the
mushrooming condition of the mobile phone market. This was bad, yet it actually
created and opened up opportunities for people like Steve Jobs, because he
could solve the "what to produce" problem by designing. In fact,
Apple Inc. did not use a lot of new technology. Steve Jobs simply used and
integrated existing technology to achieve his goal. Although Steve Jobs was no
designer, his taste was rather different from ordinary people. With that, he
encouraged his designers to engage in design and innovation, and successfully
built the Apple Inc we see today.
the same way, FMCG and clothing stores do have ways to be out of such
predicament, but they have to change their business owners and ways of thinking.
The business owners have to be shifted from being investors and operators to
designers. Under the condition of continuous overproduction, the era of
designers and intellectuals has finally come. It should not be the business
people who run the enterprises, but the artist, designer, and engineer. Of
course, they must be real designers and intellectuals. Those pseudo-designers
and pseudo-intellectuals cannot bring about the "solution" to the
conventional industries and enterprises. There is no future for those
imitations of design. In China's coastal regions, the collapse and recession of
a large number of FMCG enterprises have proven this point. Soon enough, enterprises
will have to compete to get the best product designers, otherwise they will
fail to create achievements and become sought after by the capital markets.
fast-moving consumer goods industry, as well as many conventional industries, are
under multiple pressures in the context of overproduction and geopolitics. Many
of them are regarded as sunset industries devoid of vitality and expectation.
But if these industries can change their thinking and design, it is possible for
them to rise and gain new development space.
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