The week of the Fourth of July holiday is one of those moments in the year when the rhythm of nature, our lives, and our businesses slows and briefly pauses, giving us a chance to catch our breath and reflect on where we’ve been and where we’re going.

In the retail industry, where we’ve been is through a gauntlet of what are referred to on Wall Street as black swan events.

These are developments of enormous consequence, positive or negative, that can’t be predicted or calculated for, such as pandemics and wars. (The term refers to the discovery in Australia in 1697 of swans that were black, upending the scientific dogma of the time — that swans could only be white.)

Near the end of last year, about four months before companies like Target and Walmart revealed staggering inventory gluts, those of us with long memories in the retail industry could sense that air was leaking from the bubble of hype and hope that had sent the Dow Jones US Retail Index soaring last year to an all-time record. Target was having a pretty good year, all things considered. Margins were widening and its expanding click-and-collect operations were paying off.

But it was clear by the middle of last December that inflation was kicking up and consumers were starting to get wary. It was equally clear that the supply chain problem was about to get worse as containers loaded with seasonal goods began arriving after the holiday season was over.

It was an easy prediction that warehouses would soon be stuffed with excess merchandise that retailers were going to have to get rid of and take painful losses, which is what’s happening now.

If it was so clear to us in December, why was the news in April of Target’s and Walmart’s inventory fumbles such a shock that the Dow Jones US Retail Index has since lost about a third of its value?

Similarly, the Dow Jones Apparel Retailers Index recently hit a low on par with where it traded more than seven years ago.

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One of the reasons, black swan events aside, is that retailers weren’t paying close enough attention to what consumers were thinking and feeling about the future. They weren’t paying attention to the slow but steady rise (up nearly 50% in 2021) in the price of gasoline, an obvious and pervasive factor in consumer sentiment and consumer expectations about the future, both of which indicators were crumbling through most of last year.

Now the economy appears to be slipping into (or is already in) a recession and the retail industry faces yet another year of scrambling to readjust to rapidly changing conditions. In fact, this may be a year of widespread consolidations, restructurings, and bankruptcies.

The dominos have already started to fall. Revlon, the cosmetics giant, filed for Chapter 11 bankruptcy protection last month. According to a recent CNBC report, Fitch Ratings, a credit rating agency, lists these players as being in danger of default: mattress maker Serta Simmons, Men’s Wearhouse, and sportswear manufacturer Outerstuff, among others.

Bed Bath & Beyond, which just fired its CEO with its stock down roughly 80 percent in the past three months, looks like a prime candidate for the restructuring wolves of Wall Street.

Forecasting in the retail industry is a challenge during the best of times, but especially during the worst of times, executives should be paying more attention to customers. It’s one way to find the black swans before they become events. Listen to your customer.

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