Gordmans, a chain of Midwestern discounted department stores, filed for Chapter 11 bankruptcy March 13, 2017. It continues a trend other major department store chains are familiar with, and internet shopping is likely to blame.
Another department store bites the dust
According to Bloomberg Markets, Gordmans Stores Inc. plans to liquidate all of its stores. After reporting losses during five of its six past quarters, the company listed a total debt of $131 in Nebraska federal court. For now, the stores will run as usual. However, they’ve entered an agreement with Tiger Capital Group and Great American Group to liquidate the inventory and other assets within all of its retail department stores and distribution centers. The liquidation sale is subject to the Bankruptcy Court’s approval.
Andy Hall, president and chief executive officer of Gordmans, made the following statement in regard to the Chapter 11 bankruptcy filing:
“Until further notice, all Gordmans stores are operating as usual without interruption,” he said. “The management team and all of our associates remain committed to continuing to provide great merchandise and service to our guests during this process.”
Gordmans: You’re not alone
Gordmans isn’t the only company fizzling out in 2017. According to Business Insider, nearly every major department retailer chain has closed – or will close – the doors of many stores. Macy’s, Kohl’s, Walmart and Sears are among the chains that have shut down stores over the years to make up for losses, but it’s not over yet. Macy’s plans to close 100 more of its locations this year. Sears will close 30 of its Sears and Kmart stores in the next month, and even CVS Pharmacy plans to close 70 of its stores.
“Like many other apparel and retail companies, the debtors have fallen victim in recent months to adverse macroeconomic trends, especially a general shift away from brick-and-mortar to online retail channels, a shift in consumer demographics, and expensive leases,” Gordmans Chief Financial Officer James B. Brown states in official court documents.
As for the stores that won’t be closing, retailers will likely look into ways to shrink existing locations, according to RJ Hottovy, a consumer strategist for Morningstar.” As leases come up, you’re going to see a gradual rotation into smaller-footprint stores,” he told Business Insider.
Neil Saunders, CEO of the retail consulting firm Conlumino, added that the change in shopping patterns should be considered by companies across the country as they strategize on how to move forward:
“Across retail overall the U.S. has too much space and too many shops,” he told the source. “As shopping patterns have changed, some of those shops are also in the wrong place and are of the wrong size or configuration.”
Who’s to blame?
These department stores can’t blame themselves for the downfall. As Saunders stated, it’s the shift in shopping patterns. Less people are heading to the malls to buy clothing, accessories, footwear, furniture and more. Instead, they’re purchasing all of these goods from the comfort of their own homes – via the internet. According to an online survey by comScore, 17 percent of shoppers plan to make fewer trips to department stores in the next year, and instead, use their electronic devices to shop. Researchers also found that more than 50 percent of the respondents made their purchases online in 2016, up a substantial 48 percent since 2015.
“These are exciting and challenging times for retailers,” Teresa Finley, chief marketing officer at UPS told comScore. “The industry is changing at an incredibly fast rate. Listening closely to what shoppers want and boldly trying new techniques can give retailers a competitive advantage in this very competitive industry. UPS is working with shoppers and retailers to provide a seamless, engaging experience that everyone will enjoy.”
This says a lot about the shifting landscape, and how online shopping will likely continue to be the prominent way to shop as technology continues to transform.