Retail Bankruptcies Exploding: Here Are Sectors Where It’s Happening

It’s being called the Retail Apocalypse by analysts as 2017 sees massive spikes in retail bankruptcies. Some are saying that the retail bubble has burst, and the fallout is happening now. Retailers across the country, including big name brands such as Payless, Gymboree, and Bebe, are shuttering locations, filing for bankruptcy protection, reorganizing, or liquidating. Online giants such as Amazon and big box stores like Target are swooping in to pick up where business has drooped. However, each sector is different and have been showing varying trends. Currently, Bloomberg ranks department stores as being at the highest risk of default, with electronics and apparel at second and third, respectively.

 

Here’s what’s happening in three top sectors for retail bankruptcies

 

1. Department Stores

 

Currently, many big name department stores such as J.C. Penney, Macy’s, and Sears haven’t officially filed for bankruptcy, but there have been hundreds of store closings across the country, and it only seems to be getting worse. Investopedia attributes much of this phenomenon to a shrinking middle class consumer base, the increasing popularity of online shopping, and brick and mortar businesses failing to attract mall foot traffic. The closing of department store locations also has a ripple effect over to apparel retailers that depend predominantly on the mall shopping experience to make sales, since department stores are traditionally anchor retailers in larger complexes.

2. Apparel

 

Apparel chains are being hit hard across the country, with hundreds of stores closing or complete disappearances of brands that have been around for decades. USA Today reports that 19 companies, including Rue21 and Payless, both of which have filed for bankruptcy, have a combined $3.7 billion in debt. Other recognizable names include The Limited, Wet Seal, and BCBG Max Azria, now closed and a reflection of how badly brick and mortar retailers are in trouble. Experts predict that things will get worse before they get better as the industry tries to stabilize amidst the upheaval, and the roster of names is sure to grow.

 

3. Electronics

 

Electronics retailers have been hit hard, too. RadioShack, much beleaguered by debt and having filed one bankruptcy in the last two years, has announced they plan to close 9 percent of their remaining stores as they file for their second bankruptcy. The retail economy is currently in a downturn, making it extremely difficult to stay afloat, especially if business has already been poor to begin with.

 

Overall, it’s a bad year for retailers, and they’ll need to come up with new ways to attract shoppers that don’t rely solely on foot traffic. With the dwindling popularity of a traditional mall shopping experience, many consumers are now doing most of their shopping online with the advantage of price comparison research, finding products for cheaper than in-store price tags, and the convenience of shipping to their own home. Brick and mortar retailers in all industries will need to be more forward thinking if they plan to survive the year. However, once the bubble has burst and the fallout finishes, there will be opportunity to reinvent brands and re-think approaches to the shopping experience customers want.

About Chad Van Horn

Chad T. Van Horn, Esq. is a South Florida business leader and founding partner attorney of Van Horn Law Group, P.A. Through a combination of dedicated philanthropy, spirited entrepreneurship and legal expertise, he applies his resources and network to helping people. Learn more about Chad Van Horn

Chad Van Horn

Chad T. Van Horn, Esq. is a South Florida business leader and founding partner attorney of Van Horn Law Group, P.A. Through a combination of dedicated philanthropy, spirited entrepreneurship and legal expertise, he applies his resources and network to helping people. Learn more about Chad Van Horn

Share
Published by
Chad Van Horn

Recent Posts

Surviving Costs, Care and Debt After Cancer Treatment

Cancer and the associated debt after cancer sucks. It’s a devastating disease for young and old, devastating to families, and…

3 days ago

What Is The Financial Impact of Divorce?

Divorce is traumatic even when it is amicable and desired by both parties.

1 week ago

Student Loan Tax Offset Hardship Discharge: Is It for You?

It’s the time of year when so many people plan out what they will do with their tax refund money.…

2 weeks ago

Strategies for Getting Out of Debt (Eventually)

Getting out of debt is like losing weight. You didn’t pack it on overnight, and you’re not going to lose…

3 weeks ago

Thinking about Using Tax Refund to Pay off Debt?

If you are thinking of using tax refund to pay off debt, you may need to think again.

1 month ago

What to Do (and What Not to Do) When You’ve Been Furloughed

If this is your first shutdown, check here for your agency's contingency plans and here for special instructions and conditions from…

1 month ago