While individual D.C. area retailers assess the effects — both positive and negative — of having several hundred thousand furloughed government employees (some stores have seen an obvious downturn in sales, while others have benefited from out-of-work employees getting shopping done), retail at large is carefully considering the debt crisis and the subsequent, ongoing shutdown.
When the shutdown first began, the sector’s initial concern was dealing with trade issues. With U.S. ports remaining staffed and open, imports and exports weren’t immediately negatively impacted, but Julia Hughes, president of the U.S. Association of Importers of Textiles and Apparel, noted that the shutdown was making it difficult to interact with certain trade agencies, due to downed government web sites. With the debt crisis remaining unsolved and the shutdown dragging on, retail across the board is deeply concerned and weighing in.
Kenneth Cole, of course, chimed in with a pithy tweet, as he is wont to do. Other fashion industry CEOs, however, are offering more specific solutions. In an op-ed in the Daily Beast, Fifth & Pacific Companies, Inc. CEO William McComb provocatively asked whether binding arbitration might be the only way to get things done, and pointed out how effective it has been in helping companies and labor reach productive agreements. In that spirit, he also called for giving the Simpson-Bowles commission of 2010 another look as a bipartisan solution. Except this time House and Senate leadership, as well as President Obama, would agree up front to support and implement its recommendations for tax reform and spending cuts. Both sides would agree to end the government shutdown immediately, as well as a debt ceiling authorization that will adequately cover the projected spending budgeted for a period of at least one year. Both sides win, both sides lose, and we all get back to business. Sounds worth a serious look!
McComb isn’t the only retail CEO to warn of the very real economic dangers of the debt crisis. Macy’s CEO Terry Lundgren recently noted the threat to the already “anemic economy” posed by a potential government default. During the Society of American Business Editors and Writers fall conference, Lundgren recalled the screech to a halt in consumer spending the day Lehman Brothers collapsed in 2008. He predicts a similar hit for retailers, should a solution to the debt crisis not be reached.
Beyond McComb and Lundgren, retail’s call for the end of the shutdown extends across the industry’s spectrum. Walmart CEO Bill Simon noted that the shutdown is terrible for consumer confidence, while a week ago the National Retail Federation urged Congress and the Obama Administration, via an open letter, to end their impasse and the shutdown. Howard Levine, the CEO of Family Dollar, weighed in to his investors about the very real, extremely unfortunate impact the shutdown is having on that company’s core customer base.
As the October 17th deadline on the debt ceiling looms, let’s hope Congress will heed the reasonable recommendations and warnings from the retail sector, along with the myriad others they’ve received from their country’s citizens.
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