Thursday, October 9, 2014

Why Retailers Go Bankrupt

CNBC has a slide show with store logos of retailers that have disappeared in the recent past. On the list: Borders, Tower Records, KB Toys, Circuit City, CompUSA, Blockbuster, Woolworth, Mervyn's, Linens 'n Things, Bombay, and Coldwater Creek. The Boston Glove has its own slide show of defunct retailers.

Not on most of these recent lists because they're LONG gone: Kresge, Higbee's, Halle's, Peck & Peck, Gimbels, B. Altman, Loehmann's...the list really does go on and on. Just do an online search and you'll find Wikipedia pages devoted to defunct retailers.

Also see the retailer graveyard at Retailer Graveyard, maintained by Green Light Retail Real Estate Services. Here's a link to the dead department stores, for instance.

Why do retailers go bankrupt? A variety of forces in the marketing environment are at play:
  • The economy
  • Changing consumer tastes
  • Changing shopper behavior
  • Population shifts 
  • Industry consolidation
  • Management issues
  • Financial woes 
  • Technology 
Ecko expanded rapidly and filed for bankruptcy only 21 years after its founding. Coldwater Creek faced changing fashion tastes. Circuit City expanded at too fast a pace and faced intense competitive challenges. Even during the current economic recovery, some retailers may not make it.

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