Bankruptcy for Businesses

Which Stores are Going Out of Business in 2019 and Why

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You can’t blame Amazon for everything, they are not the arbiter of which stores are going out of business and which are staying in. Almost 5000 foreclosures have been announced in the first three months of 2019, while that is down from 5500 from the year before, it is still a devastating number. Many of the shopping mall stalwarts simply do not have enough traffic to sustain the high overhead of destination shopping. This includes Amazon, which is shuttering 87 pop-up shops inside Whole Foods, Kohl’s, and a variety of shopping malls. However, Amazon is also still planning to open thousands of brick-and-mortar locations, perhaps having figured out more of the new retail formula than established stores.

Changing Tastes Determine Which Stores are Going Out of Business

The primary drivers in which stores are going out of business are demographic changes. While shopping mall staples such as Gap, Victoria’s Secret, Abercrombie and Fitch, and Charlotte Russe are closing stores, it’s more about not keeping up with the tastes of the marketplace. Charlotte Russe’s teens grew up, and much like the gotta-have mall stores of the 90s, they did not keep up with the vital changes in their targeted groups. Victoria’s Secret is experiencing a reversal of fortune as up-and-coming brands such as Adore Me speak to younger shoppers with “Lingerie for Every Body” and modestly priced sets.

JCPenney, one of the “anchor stores” along with Sears and other regional department stores long held the mid-range between mass merchandisers and upmarket department stores. Unfortunately, as it tastes changed and wallets tightened during the recession, JCPenney stuck to its previously successful formula and while it remained successful for a time, it did not appeal to younger shoppers as they set up their own homes or changed from school-going teens to young people in the workplace. Perhaps, most especially, none of the “mall stores” was prepared for the advent of the internet, the variety that online shopping could offer, and the convenience to working people of having their purchases delivered to the doorstep in two days with free shipping.

Other Factors in the Retail Apocalypse

Changing tastes in the market are one factor, Amazon is another, but the elephant in the room is private equity and its impact on the retail ecosystem. Private equity is the invisible factor in determining which stores go out of business. The practices of private equity cause even highly successful chains such as Toys R Us to go into a tailspin, and then close having been squeezed for every penny. Private equity was supposed to be the savior of numerous retail concerns, but after being purchased by private equity, stores such as David’s Bridal, Toys R Us, Claire’s and others instead found themselves burdened with insurmountable debts, stagnating sales, and finally facing liquidation and a place on Wikipedia’s listing of defunct stores.

The most glaring example is the acquisition and slow dismantling of Sears via Eddie Lampert – a man credited with genius based on the success of his hedge fund. Merged with Kmart, the new Sears Holdings Company was supposed to be a super retailer that would carve out a niche between Wal-Mart, Target, and Amazon. Instead, under the new management, Sears began cutting costs to improve profits, buying back stock boosted the share price, and spinning off and selling the profitable parts of the corporation such as Land’s End and Craftsman Tools.  

In short, Eddie Lampert owned the company, ran the company, was the company’s biggest creditor, and purchased many of the assets formerly owned by the company. Now his hedge fund has purchased the shattered shell of Sears out of bankruptcy, though the lawsuits are still flying thick and fast.

Look up “self-dealing.”         

Small Retail Retrenches

Small retail – from mom-and-pop stores to local chains – doesn’t have the mass of sales that larger chains testing, but they have a core local audience for items and services that are not available from larger businesses. Small retail was the first to take advantage of venues such as, eBay, and e-commerce platforms such as Magneto and Shopify. Without high debt loads, demanding investors, and private equity, smaller retailers are healthy and thriving where larger chains have failed.

When You’re Not the CEO

The protection of bankruptcy is not just for the company, but for regular people, too. Nobody knows which stores are going out of business next. When your retail job goes away, it’s easy to panic. You’re not living on hedge-fund money and might have other debts such as student loans or medical bills that need to be serviced. You may be facing falling behind on your car payments, or dealing with credit card debt. When your store is marked to close and be liquidated, it’s a good time to sit down and take a long look at your own finances and think about how you can keep on paying the things that need to be paid while you job-hunt.

Who We Are

No matter which stores are going out of business, our law firm is here to help individuals, businesses, and creditors understand their rights in bankruptcy, and how to deal with debt. Our blog has lots of useful articles and information to help everyone in just about every debt situation. Credit cards, student loans, business debts, medical debt; it doesn’t matter, we are experts in resolving all types of debts with or without bankruptcy.

Our offices in Fort Lauderdale and West Palm Beach are open six days a week, and by appointment on Sunday. We have the experienced attorneys and staff that can answer and handle any kind of debt situation and more! Get in touch with us for a free initial consultation and we will work with you to resolve debt issues with or without bankruptcy. We genuinely care for clients, and want you to have the peace of mind that goes with being free of debt that is preventing you from moving forward with your life.

Article Name
Which Stores are Going Out of Business in 2019 and Why
The primary drivers in which stores are going out of business are demographic changes.
Chad Van Horn
Van Horn Law Group
Van Horn Law Group
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Published by
Chad Van Horn

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