Alexander Borodin, managing director of Mila - shoes wholesale, explained the reasons for closing shoe retail stores in a personal column on the company's website.
As Alexander Borodin wrote in his personal column, recently on the specialized platforms of MNPO and Babybiz there have been frequent reports of the closure of retail stores. The author explains this situation by a drop in income below the breakeven point, due to the deep off-season.
“The closing wave in retail will affect wholesale companies, and then it will also sweep federal suppliers and manufacturers. Already, many federal companies have shown negative dynamics in sales at the end of 2013 compared to 2012. The situation is similar in wholesale, ”writes the manager of Mila - shoes wholesale. By the way, according to the results of 2013, the Ural distributor had a slight increase in sales - about 1%.
According to the author, most of the economic crises of our time are credit ones. First of all, companies suffer from them, in the total turnover of which borrowed funds exceeded the permissible 20%. “Based on my experience, I can say with confidence that today there are companies that have this level of 100%. They are doing well while the financial bubble is growing. But as soon as it bursts, they cannot fulfill their obligations, ”says Alexander Borodin.
A good example is the practice of Mila, which issues commodity loans of no more than 10% of the total turnover and at a high cost, which is an additional “protective barrier”. “As a result of the chosen strategy, we surrounded ourselves with solvent counterparties who effectively use their own working capital and practically do not resort to borrowed funds, which during the crisis allows them to feel quite stable,” writes the manager of Mila - wholesale shoes.