Mercedes Benz sold 5,432 smart models in the U.S. market over the first nine months of this year, down 32.8% from the same period last year. Exotic luxury brand Maserati sold more units than the brand of tiny cars, even though some Maseratis cost more than $200,000. Smart vehicles rarely cost more than $19,000.
Smart’s greatest challenge — among the many it faces — is competition. Every major car manufacturer has a brand that competes with smart. Several of the best selling cars in the U.S. market are inexpensive, high mileage cars — reasonable alternatives to smart. The Nissan Versa, for example, which has sold more than 110,000 units in the United States so far this year, has a base price of $11,990 and gets around 36 mpg. Most of smart’s competitors also have much larger marketing budgets.
Compact fuel efficient cars have been slow to catch on in the United States. With relatively relaxed gas taxes compared to Europe and falling oil prices — crude oil fell below $50 a barrel for the first time in over five years in early 2015 — there is even less incentive for Americans to favor light vehicles over the popular SUV.
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The office supply retail business was hard hit following the evolution of computerized offices. Sales at the three large main U.S. players have been eroding for years and their brands struggling. None, however, was struggling as much as OfficeMax, the smaller of the three chains. The November 2013 merger of OfficeMax and Office Depot served to further dwindle the already disappearing brand presence of OfficeMax. With the proposed $6.3 billion merger of the new combined company with Staples — its only rival — it is highly unlikely the OfficeMax brand will make a comeback.
As many as 1,000 OfficeMax stores will be closed if the takeover is approved. The merger would create a near-monopoly in the U.S. office supply business, and the FTC will likely scrutinize the proposal far more than it did the OfficeMax-Office Depot merger. Many on Wall Street, however, anticipate the deal to be approved.
3. American Apparel
Specialty clothing retailer American Apparel — one of the fastest growing U.S. companies only a decade ago — filed for Chapter 11 bankruptcy protection early this October. The company cited spiraling debt levels, plummeting sales, and a seemingly endless legal battle with ousted company founder Dov Charney as reasons for the filing — which has not been approved yet.
In the last quarter reported before American Apparel filed for bankruptcy protection, revenue dropped to $134 million from $162 million in the same quarter the year before. The company has just 130 stores in the United States, far fewer than its major competitors. Gap, for example, has more than 800 U.S. locations.
Shifting consumer preferences from logo-based stores to fast fashion chains such as Zara and H&M have hurt sales at American Apparel. Fast fashion retailers replace their supply much more quickly and tend to offer more affordable items than the clothing offered at American Apparel and its peers.
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