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Ann Taylor, Lane Bryant, Gymboree are the Latest to Close Stores

Ann Taylor, Lane Bryant, Gymboree are the Latest to Close Stores

It’s hard to compete against Amazon.

https://commons.wikimedia.org/wiki/File:Ann_Taylor_-_panoramio.jpg

More retailers have decided to close stores while Gymboree has filed for bankruptcy.

Ascena Retail Group has decided to close “between 250 and 650 locations over the next two years.” This group owns Ann Taylor, Lane Bryant, and Justice stores among others.

CEO David Jaffe did not specify which brands the closures will affect. But he guaranteed that 250 stores will close. 400 others will definitely close “unless the company can negotiate lower rents at these locations.”

From CNN Money:

He said that the move is necessary to help the company traverse the deeply troubled brick-and-mortar retail market. Jaffe said Ascena is facing a “persistent traffic decline” and expects that to remain a “major headwind” for the company.

Ascena is far from the only company feeling the pressure. Stores that were once staples of American malls are failing rapidly, largely because of increasing competition from digital retailers like Amazon (AMZN, Tech30).

Gymboree, a children’s clothing store, filed for Chapter 11 bankruptcy protection. The company hopes to stay in business, but will close down 375 to 450 stores. It has 1,281 stores total with 11,000 employees.

From USA Today:

The bankruptcy was widely expected after Gymboree refused to pay certain bills in recent months, placing the retailer on a collision course with creditors. The retailer said it hopes to slash $1 billion of its $1.4 billion in debt and to win approval for its plan by Sept. 24.

“We expect to move through this process quickly and emerge as a stronger organization that is better positioned in today’s evolving retail landscape, with the right size store footprint and greater financial flexibility to invest in Gymboree’s long-term growth,” Gymboree CEO Daniel Griesemer said in a statement.

Companies have tried to fight against Amazon and others with its own websites. But online shopping on Gymboree’s website has also gone down. Chief Restructuring Officer James Mesterham said that the company’s “web systems are ‘dated and unsupported.'”

Mall traffic has definitely gone down. When I pitched this article to Professor Jacobsen sent me this quote:

We were at the major high-end mall in RI on Sunday afternoon, normally a busy time. It was a ghost town. Lots of empty storefronts. Quite depressing. Even the high end stores like Nordstrom seemed to be low on inventory, they stretched out the merchandise on shelves to make it appear they had more than they really did.

Back in April I blogged about how all these closures could set a record for 2017. Fourteen chains alone have filed for bankruptcy in the first three months of this year.

Despite the presence of online shopping, Oliver Chen with Cowen & Co discovered that Americans do “prefer physical stores 75 percent of the time.” So how does a company keep the customers?

The key is creating the right experience, whether it’s online or off.

Retailers should “refocus on customers,” Chen said. “Management needs to be fixated on speed of delivery, speed of supply chain, and be able to test read and react to new and emerging trends.”

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Comments

notamemberofanyorganizedpolicital | June 12, 2017 at 4:21 pm

It’s also hard to compete with Salvation Army and Goodwill……

theduchessofkitty | June 12, 2017 at 5:00 pm

I used to shop for children’s clothes at Gymboree. The clothes are high quality, and the discounts were all right.

Then, I had to face shopping for two girls instead of one. Then, I had to face the fact that the “Gymbucks” were not stretching the savings as well as I thought they would. Then, I faced ghe fact that most moms who shop for children’s clothes don’t fight with a mob of other moms at the Gymboree at the Mall for the few pieces of clothing left at the Christmas sale. Then, I faced the fact that inflationary pressures plus a stagnant income equaled, “Gee, I can’t afford to buy those clothes there!” Then, my elder one is now transitioning to more tween clothing – which means the younger one still has to wear children’s sizes. She wears all the clothes that no longer fit her big sister.

Then, I discovered clothes at Walmart.

Then, my girls both decided they had enough of Gymboree clothing. They want to look “normal” at school. So, I deleted my Gymboree account. Nowadays, if they want clothes, it’s to Walmart and Amazon that we go. If they want dresses that match, Amazon’s got it.

Who needs Gymboree?

    notamemberofanyorganizedpolicital in reply to theduchessofkitty. | June 12, 2017 at 6:56 pm

    I hear you.

    Competition from Wal-Mart, K-Mart, Family Dollar, Dollar General, Dollar Tree and other dollar stores….stores that often have different and unique clothes. That as opposed to the “Me Too” brand carrying of the same designer names. (In how many stores can you now find “Polo” or “Calvin Klein”….Ross, TJMaxx, Marshall’s, Kohl’s, Dillard’s, Macy’s, etc. etc.)

“So how does a company keep the customers?

The key is creating the right experience, whether it’s online or off.

Retailers should “refocus on customers,” Chen said. “Management needs to be fixated on speed of delivery, speed of supply chain, and be able to test read and react to new and emerging trends.”

Refocus on customers, he says… and then lists a couple of basic skills management should have.. which the customer isn’t involved in.

Look, if you want me in your stores… and this weekend I DID go to the Mall for clothes… I have a suggestion: Hire and train your staff. Staff you stores. Mop the damn floors. Have a manager on site who can make decisions when conflicts come up.

I KNOW you need to save money, to cut costs, to be fiscally responsible. How about you cut management who don’t yet know how to do the basic job of managing?!?

Speed of supply chain… how about keeping things in stock?

Competition from Amazon and Walmart is only part of the reason why brick and mortar retailers are failing. Extreme consolidation of retailers through merger and buyout has flattened the relevant market and commoditized the shopping experience. Stores like Dillard’s, Marshall Field’s, Bullocks, Magnins each provided a unique shopping experience from each other and each usually had a unique line of merchandise. The relevant market had many tiers represented by stores like Sears, Montgomery Ward, Broadway, Wiebolt’s, May’s, Nieman Marcus, each appealing to a different class of customer.

Federated bought and consolidated many of these stores. The brands carried by Macy*s are the same as at other stores. DKNY, Michael Kors and others are ubiquitous.

Now the all seem to cater to the least common denominator of customer. Even the Macy*s flagship store on Union Square in San Francisco, which used to be a very high end location now seems like a third world bazaar. I am not talking of the race or ethnicity of the shoppers but of the shopping experience itself.

Once past the very impressive entry one would expect a high end experience. Instead one is greeted by merchandise randomly scattered about shelves, racks and floors, and a sales staff that just doesn’t seem to care about the appearance of their department or of rendering even minimal customer service. With that type of shopping experience from what should be a mid to high level store, why wouldn’t one go to a store like Penney’s to purchase the exact same merchandise at lower cost.

    Tom Servo in reply to MadisonS. | June 13, 2017 at 12:25 am

    I agree with your take on things; our Macy’s closed, but everyone I knew who used to shop there years ago had quit going because the store started to look dirty and the employees didn’t care. I used to shop at Penney’s, but after that ownership fiasco a couple years ago they changed and now I never find anything I want. Sears – give me a break, go ahead and close already.

    Maybe it’s just the local store, but I have to give a plug to Dillard’s – they still have one of the best men’s clothing sections around, and the service still recalls the golden age of retail. They’re about the last of the old time Dep’t stores still holding on to a lot of customers where I live – all the other business seems to have moved on to WalMart and Target.

      notamemberofanyorganizedpolicital in reply to Tom Servo. | June 13, 2017 at 1:06 pm

      Dillard’s is a winner.

      It’s not just your local store.

      They do so many things different from the other big, “traditional” department stores.

      They don’t hold a sale just because business is slow. Instead they stick to their set calendar of steady mark-downs on out of season merchandise.

      Several years back they implemented new inventory tracking software that let them keep tabs on sale of goods on the store’s floor – in real time. They gave their suppliers 30 days to adapt the same software – for their co-ordination with Dillard’s – or Dillard’s dropped the supplier.

      Since the cost of merchandise is the biggest expense for retailers, the software let them quickly re-order goods that were selling well, and not order items that were moving slowly.

I don’t know … thinking of the whole Mall thing as retail may be misleading. Perhaps a Mall fills the same niche as the movie theater did eighty years ago, and not least because both venues have good air conditioning. If one is just buying stuff at retail, a Mall is an inefficient and expensive way to swap money for hard goods. If I want to buy a violin peg reamer or a case of ammunition, parking at one end of a yuge parking lot and walking a quarter mile or so between stores and lugging the swag back to my car certainly doesn’t stack up well against sitting in my computer chair and clicking a few things. But if I want to load up the kids and shoot the afternoon wandering about and peering in the windows at the gewgaws while the kids run around in an environment where they won’t get run over by trucks, a Mall beats the hell out of online shopping.

In other words, to some degree, one is commerce, the other is entertainment.

There are some things best done in a physical store. Buying a motorcycle helmet, say, or the right size longbow—things which have to fit a person. And sometimes just wandering the aisles is a better way to shop; suppose you need one of those things, what’s it called, it looks kinda like this other thing you sometimes see over in “home decor” or “plumbing” … you’ll never find it on Amazon, but in the store, it’s right in front of your nose, right next to the thing which wasn’t quite it, but kinda like it.

Retail’s a more complicated subject than it first appears. About the only thing certain is that Mall rents are too damn high.

buckeyeminuteman | June 12, 2017 at 7:04 pm

I’m all about online shopping, sales tax is for suckers. But when it comes to clothes, there’s no way I’m buying them unless I try them. They have to fight right and feel right. Not to mention you miss out on people watching if you never go to the stores.

Think twice before you have the urge to order on Amazon.com: try and support a local store – you’ll miss them terribly once they are gone – especially when you discover Amazon.com and Walmart.com shipping prices going through roof, now that they’ve got you to destroy neighborhood stores.

Besides, who wants to keep funding the fake news of the Washington/Amazon Post?

I stopped going to the mall back when they tried to pretend Christmas shopping didn’t involve Christmas. Now I don’t go because I have back problems and can’t walk far – especially if I’m carrying something. Sears, at least, introduced shopping carts a few years ago, but my shopping habits had changed by then.

It really shouldn’t be all that hard to compete with Amazon if one is selling clothing (with the exception of utility clothing such as sox, underwear, etc.).

Because there are many drawbacks to buying and selling clothing online: customers can’t see the colors accurately on a screen, they can’t feel the fabirc, can’t try on the clothing, and it’s usually more work and expense to return items to an online retailer.

Thus, although online shopping is usually more convenient for customers, that’s less so (if at all) when one is buying clothes. And for the retailer, all those returns must be very costly indeed.

Then again, if you’re selling mid-price clothing it’s going to be tough as spending more seldom buys better quality (better fabrics, better stitching) anymore and there’s plenty of cheaper alternatives if you just want something trendy that only has to last for a season or two.

Overall there are just too many stores selling too many things that few of us really need. So, sure, online competition can and will ravage some aspects of bricks-and-mortar retailing (e.g. electronics and small appliances, anything that can be shipped at reasonable cost relative to its value and which customers really don’t need to see and handle before buying). And perhaps also a trend away from “shoppertainment” as a leisure activity.

But to some extend this is just a case of over-building, a routine business-cycle story of overcapacity leading to cyclic retrenchment.

The enclosed air-conditioned malls are have been on a skid for the past 25 years. Nobody is building new ones now and a return to streetscapes has been the answer to mall affordability. But anchor stores are dying and the biggies, Macys, Sears and J.C Penney are on a steep slide.

Temporary short-term tenants are the rising trend and that can only bring the malls down – because temps don’t pay the heavy common maintenance and tax load. If communities want to save their malls, there must be a property tax reassessment downwards in a significant manner.

Remember when malls had well-staffed help desks, visible cleaning staff and lots of uniformed security officers? Not so much anymore because of cost cutting. Remember when common areas were always pleasantly cool in the summer and warm in the winter? No?, me neither.

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