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Chicken Little!

By Mike Lauber - March 3, 2017

You know the story, right? Chicken Little gets bopped on the noggin by an acorn and wrongly assumes that the sky is falling. He runs hither and yon telling Henny Penny, Ducky Lucky, Turkey Lurkey and others that the sky is falling. They all buy into the pending tragedy. The hysterical group eventually encounters Foxey Loxey who first tricks and eventually eats the various characters. The moral of the story: Don’t overreact or it may cost you.

We see such henny-pennyism happening among observers of the retail world. “The sky is falling!” has been replaced by “Amazon is coming!” and “Retail is dying!” The latest cry from last week was the announced closure of 140 JCP stores. Though Penney’s will still have about 950 stores, one might conclude that all retail as we know it will soon cease.

Such dire predictions are a fairy tale.

Similar fairy tales arose among the manufacturing sector over the past 40 years. In the 1980s, Japan was going to crush US manufacturers. In the 1990s, China would eat us up. In the latest iteration, Mexico is stealing our jobs. Though all of those countries made inroads, many factors have played a hand in fomenting hysteria: currency exchange rates, growing globalization, technology-driven productivity gains and stagnant wages. US manufacturers have changed but they haven’t all gone away.

The National Retail Federation predicts 3.7-4.2% growth for 2017 among all online and in-store retail (excluding automotive, gasoline and restaurant sub-sectors). Yes, online will outpace in-store growth but will remain well below 10% of total US retail sales.

The lesson: keep your wits so you don’t lose your heads. Both US retail and manufacturing will experience ups and downs but are here to stay.

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