Another retail bankruptcy

Belk’s, the regional clothing retailer, has filed for bankruptcy, and will reopen with fewer stores. Retail stores have been in trouble for over ten years, well before the pandemic put the final knife in more than a few. There have been three principal causes over time that have overlapped and continue:

  • Retail malls were over built to the extent we have many thousands of unneeded malls just in this country. Rather than improve a mall, new ones were built, often cannibalizing on existing markets for the stores.
  • Walmart had a significant impact on retail stores, leading the way for the other discount retailers to eat away at margins for others. When Walmart came to town, other retailers went away.
  • Online ordering put brick and mortar stores on notice and many out of business. The ones who survived, blend online with in-store purchasing, better than others. Even Walmart was harmed by the online effort and had to react.

So, the pandemic comes along and those store franchises that were teetering, fell down. There will likely be more bankruptcies in the future. All stores must now compete against cheaper and easier online sales. Those store franchises with better customer service models stand a better chance at survival, but all are at risk, unless they can embrace online sales along with in-person sales. Nevertheless, COVID has put a damper on in-person sales and will continue to do so.

When I think of Belk’s, I think of my grandmother who worked there for years in a small town in Georgia. She worked for a local retail company that sold themselves to Belk’s. She ran the children’s department, then later ran the men’s clothing department. Many of her customers truly grew up with her.

Her favorite story was the day Mr. Belk came into the store. He toured the store and needed to borrow my grandmother’s pen, which he put in his pocket by mistake. My grandmother said, “Mr. Belk, that is my pen. My boss is to cheap to buy us pens, so if you want me to do my job, you need to give it back.” It should be noted her boss was standing right there.

My grandmother was all about relationship sales. Her customers would come back after college and ask for her to outfit them in new suits, since they trusted her. And, that is why retail stores do have a market when done right. Relationships. Trust. Customer first. Yet, if they don’t get the technology end right, it will be for naught.

20 thoughts on “Another retail bankruptcy

  1. Your grandmother sounded feisty. Used to be a favourite pastime of Canadians to visit the States for your shopping malls and outlet stores. I’ve noticed the decline, even before Covid, as you said. Hard to imagine what could save them.

    • VJ, my grandmother was both a character and had character. When she got up to go do something, I once asked her if I could sit her chair, to which she responded, “They are all my chairs, but you can sit in that one.”

      It is interesting that you noticed the decline in stores well before COVID. There was another reason where some stores felt that could be the anchor tenant, but needed the cache of another to draw people. Food Lion ran into that problem all across the south and had to retrench.

      Keith

  2. The same problem is Worldwide Keith. When we lost all the Woolworths stores from our High Streets some years ago there was no-one to replace them. Eventually, a lot was taken by a pub/meal chain, some by Pound Shops, and some are still vacant holes in High Street Shopping. Others have followed until it seems every other shop is an empty shell.
    Hugs

    • David, sadly these are employers of many people who will in turn buy. What many fail to realize is how many jobs are expendable, so at some point society must ask where can people with minimal education work? Keith

  3. There has been a steady scything of the old ‘Retail Store’ for a decade now, and covid has added to the woes.
    The problem being two-fold. Firstly the expansion of the ‘Super-Market’ beyond Food and other Household items and secondly the rise of On-Line shopping. These are both sources we tend to go to these days.
    What this will evolve into has yet to be settled. No doubt folk felt the same way when the first Apartment Stores began to muscle out the small retailers, although that was a century in the making; this has been a decade.
    Will it be the circumstance that on-line cannot cope? Sheila and I have often commented that Amazon is getting quirkier as it endeavours to take on a bigger and bigger market share. It’s search engine is getting very ‘singular’ with its results.

      • ‘so at some point society must ask where can people with minimal education work?’.
        A very salutary question Keith, because of the political aspect. Such folk are naturally very angry and thus willing to pick up on any populist venture. Whereas this would seem to be directed just at the USA, actually it is a world wide problem. You can pick any region of the world (with the possible exception of Antarctica) and find this simmering or already bursting out into military style violence.
        Only in full employment is there anything approach civic stability. (sorry about the socialist tendency there…with me…. it happens)

  4. A recent defeated US politician understood well ” Relationships. Trust. Customer first.” He relentlessly drove those themes. He achieved the second highest voter turnout in US electoral history. I’m guessing that means, grandma was right!

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