The carnage in the Retail sector does not Stop
Even established names that have been with us for centuries are now starting to fall apart all around us due to the toughest economic environment we have seen since the 1970s. Consumers will lose some of their favorite stores this year, according to data provided by several sources familiar with the matter. From Starbucks to Disney, from apparel retailers to department stores, everyone in the industry seems to be on the edge, and mass shutdowns are already happening as retailers grapple with the impact of declining sales, inflation, and huge debt burdens at a time of increased financial volatility and higher potential for disaster.
For example, David’s Bridal, known as the Walmart of weddings, just filed for bankruptcy and announced that it has plans to lay off 82% of its staff, or around 9,200 workers. The company was in distress for several months before seeking Chapter 11 protection. That marked the second bankruptcy in five years. CEO James Marcum revealed that in case the company does not find a buyer soon, all stores may be closed by the end of this year, an announcement that sparked anxiety among brides-to-be from all over the country.
Similarly, 99 Cents Only Stores has already restructured its debt multiple times out of court. But it hasn’t fixed its underlying financial problems, and persistent inflation and higher operational costs are worsening its internal issues. The company has over 350 locations in four states, but consumer demand is falling steadily as prices complain about rising prices. Experts note that 99 Cents Only Stores are at a “competitive disadvantage” compared to larger retailers that have a significantly bigger network of suppliers and market leverage to keep prices low. The discount chain also reported negative cash flow for three consecutive quarters. Its low ratings are also an indication that more trouble is ahead for the company.
Kohl’s, the former department store has been in trouble for years. When it was founded in 1946, Kohl’s entered the market as a supermarket chain. But over the course of two decades, the industry changed and the company started to be crushed by bigger names in the grocery sector, leading its executives to rebrand it as a department store. Unfortunately, department stores were and still are the biggest victims of the retail apocalypse, forcing Kohl’s to exit the sector in 2022 and restructure its operations to retail fitness, athleisure, and denim clothing. However, data provided by Insider shows that for the past seven months, Kohl’s retail sales have dropped. The company’s thin margins coupled with a nationwide decline in discretionary spending are financially eviscerating Kohl’s, which is now on Moody’s Analytics’ bankruptcy watchlist for 2023.
Brick-and-mortar retail is being threatened by a myriad of problems that continue to pile on. Their greatest challenges, as we enter another economic downturn, is to prove their relevance in an era of rising e-commerce retailers as well as how to attract customers back into stores amid a trend of slower spending due to the soaring cost of living. If these retailers do not find ways to increase their revenues, balance their debts, and differentiate themselves from other emerging brands, sooner than people realize they will be gone for good. Today, we decided to compile several companies that are fighting for their life in 2023. Only the strongest will keep standing, and you should check this video out to see if your favorite brand is on the bankruptcy watchlist.
Credit to : Epic Economist