Exit strategies and sunk costs: the implications for multiple retailers

Reviews ways in which sunk costs, particularly those embedded in property ownership, can affect programmes of selective closure of retail outlets. Three examples from UK retailing in the 1990s – Littlewoods, the British Shoe Corporation and Do it All – are used to demonstrate that sunk costs have been significant in delaying the execution of rationalisation programmes, and have led to substantial “write‐offs” of property assets in company balance sheets. Certain conventions and inflexibilities in British property law and management are identified as key influences. There is shown to be a need for further research into corporate closure programmes and their relationships with property and locational issues. Some tentative conclusions for corporate retail strategies are discussed.