It’s been a tough quarter for regional retailers based here in the Pacific Northwest. They’ve all suffered from the same soft sales that the economy has imposed on national retailers, and we had a sever winter storm that knocked out a lot of the traditional holiday shopping days this season. Now we’re starting to see the fall out.
Many great independent retailers are closing their stores. In my neighborhood, a wonderful local store called Cheeky B had to call it quits and liquidate their inventory. In an all to common scenario, their out of state landlord wasn’t interested in working with them, and instead will try to find new tenants looking to risk opening a store in this economy.
Worse, the regional chains are taking a beating.
(formerly G.I. Joe’s), a regional outdoor sporting goods retailer filed Chapter 11 bankruptcy in early March and this week their assets were purchased by (now famous) retail liquidator Gordon Brothers. GI Joes was founded in 1952, they operated 31 stores here in the Northwest. Joe’s said the unseasonably try winter, hurt sales, but many people point to their recent transition from an emphasis on hunting/fishing to a more general sporting goods as their strategic mistake.
Storables, is a Portland based retailer with 8 stores filled for Chapter 11 Bankruptcy protection on March 31st. Storables continues to opperate and although very few retailers ever successfully emerge from Chapter 11, Storables may be able to use the bankruptcy to divest themselves of some of their orphaned stores (in Minneapolis and Arazona), that are likily disproportionately expensive support with advertising and inventory.
Kitchen Kaboodle is a portland based kitchen retailers with five stores. This week they announced the novel concept of cutting their days open to just four a week (Thursday through Sunday). Inventory has looked very light in these stores for several months and they’ve laid off close to 25% of their staff, so you have to be concerend about their long term prospects. They are trying to shift their brand promise to one of "Low Prices."
For the employees stuck at retailers during liquidation, it’s pretty ugly. They will lose their jobs and benefits and be rehired by the liquidator. Customers will flood the stores in a feeding frenzy, looking for great deals with very little empathy for store staff. In most cases, they won’t find great buys. Gordon Brothers historically will raise prices, and then start offering discounts from the inflated new price (a practice they mastered at CompUSA and Circuit City Liquidations).
All these store closings will also hurt food traffic for other retailers in the same shopping centers. There aren’t many big box retailers looking to expand, so you’ll likely see these "Junior Anchor" stores like Joe’s stay vancant for quite some time.
I’ll be interested to see where the entrepreneurs that started these small businesses end up. Will they stay in retail, and move on to something else? Should we all be investing in Gordon Brothers?