Marshall's Closing Signals Changing Retail Model

The Lawrence Marshall dealerships in Hempstead, TX, shut down late last week, the latest high-profile victim of the ongoing credit crisis.

It's another indication the retail model is changing in this country. The day of big inventories on dealership lots is coming to an end. In its heyday, the Marshall stores were mainstays on the Ward's Dealer 500 ranking, often selling as many as 9,000 new vehicles a year. It sold Chevrolet, Cadillac, Ford, Hyundai, Chrysler, Dodge and Jeep brands from one large complex.

The group carried large inventories and marketed itself as the store that "clobbers big city prices." It made up with volume what it sacrificed in gross profit. When Marshall closed, it had thousands of vehicles on its lot.

Floor plan lenders, though, now are frowning upon the practice of dealerships carrying large inventories. As sales collapsed, dealerships such as Marshall, find themselves losing money with no way to generate cash. The lenders are calling in the markers, putting numerous dealerships out of business.

Dealers such as Bill Heard, Denny Hecker in Minneapolis and Lawrence Marshall - -there will be others -- who depended on volume will have a tough time surviving the current economic crisis.