Opscoop Chapter II Issue XVIII: How can shutting down of stores be good for business?

There has been increase in number of brands which are closing their retail store outlets. The retailers should manage the closing of the outlets effectively so that maximum revenue and profits are earned.

In the product life cycle, the death is the most difficult phase to manage. During the birth phase, the product is growing, during midlife the product is attaining stability while during death phase the product is decaying. Most of the products, stores, business units are firms go through this life cycle in retailing. If the death phase is managed in a proper way the profits will be boosted, along with reduction in complexity of operations thereby improving the factors affecting the product life cycle in early and midlife stages.


While liquidation of the store, the demand should be forecasted. Price should be markdown along with deciding on the inventory to be liquidated. A proper timeline should be charted out for the closure of stores. If the store is closed early the operating expenses can be saved. Bold signage and unconventional advertising methods can be used by retailers to reach new demographics. It is observed that revenues earned during liquidation at times also exceeds the revenues earned during Black Friday weekend of other high demand periods.


Retailers, to sell entire inventory, at the end of the liquidation are seen discounting too intensely. Discounts at the start of the liquidation process should be given. Further, managers often transferred much less inventory from low-multiplier stores to high-multiplier stores than they should have, and managers should have shut stores sooner

Since products, stores, and retail concepts have life cycles, companies should be as adept at managing the death of each of these as they are at managing birth and mid-life. Excelling at managing death will allow retail firms to constantly renew themselves and, ultimately, thrive.


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