More Things Changing….

| January 9, 2021

A few months ago, I posted an article about stores that were closing due to drops in sales, or getting more business through online shoppers than at their storefront locations.

Well, it’s going even further now: some of the big old legendary retailers are shuttering their stores and in some cases, just going out of business, period. Can’t keep up with the times, or something like that. Online shopping is a factor, and the smarter companies take advantage of it, but the on-site retailers who still went by their brand recognition did not keep up with the changing environment in shopping.

The closest resemblance to online shopping now is those days when the Sears & Roebuck or Montgomery Ward catalogs were loaded into your mailbox, brining retail goods to your home. It was even possible, with Sears & Roebuck, to buy farm animals like cattle, sheep and chickens and farming equipment, because Sears catered to farm families back then. Unfortunately, neither Montgomery Ward nor Sears adjusted well to mall shoppers, and Montgomery Ward went out of business first. Sears has followed right behind it, locked in with Kmart. Between them, those 2 franchises have been reduced to 128 stores and are not doing well.

And there appears to be a long line of familiar storefront retail chains falling in behind Sears and Kmart.

Here’s the link for the full list of closings:  https://www.usatoday.com/story/money/2020/12/30/store-closures-2021-macys-jcpenney-among-vulnerable-retailers/3974684001/

From the article:

J.C. Penney

The department store chain filed for Chapter 11 bankruptcy protection in May after its sales collapsed amid temporary store closures.

The company was at risk of total liquidation for months as it negotiated with its creditors. After reaching a deal to sell to a consortium of property owners, including mall company Simon Property Group, J.C. Penney emerged from bankruptcy in December having closed more than 150 stores.

Rite Aid

Rite Aid’s outlook has been gloomy for several years and Moody’s considers the company to be a “very high credit risk.”

The company is stuck in an uncomfortable netherworld: not big enough to present a big threat to drugstore rivals Walgreens and CVS but not agile or rich enough to reinvent itself.

A few bad breaks haven’t helped: A merger deal with grocery chain Albertsons collapsed in 2018, leaving the company’s path to reinvention unclear.

Jo-Ann Stores

This fabrics retailer remains on the edge of trouble. Owned by private equity firm Leonard Green & Partners, Jo-Ann faces the challenge of digging out of debt while dealing with the retail industry’s other challenges.

Private-equity ownership has been a problem for many other retailers in recent years, such as Toys R Us, which liquidated after accumulating too much debt and facing intense competition.  – article.

With a giant retailing center like Amazon, where you can get literally anything including the original “Poldark Cookbook” from that popular TV series, even the malls that were so popular for your kids to go to on weekends, because everything was there – movies, food, bathrooms, shopping, even gyms if the mall was big enough – are beginning to close down or being repurposed into facilities for other uses. Neiman Marcus is already on Moody’s list of vulnerable retailers based on their financial circumstances.  Companies like Gander Mountain, long since sold and restructured, relied too heavily on a select market group, whereas a company like L.L.Bean in Maine pulled back, regrouped, and re-examined their retail and catalog market, and went with that.  Bass Pro Shops picked up Cabela’s and has stayed in business. Retailing is a tricky business, but it does not mean “expand and go broke”.

This CV19 pandemic may have done some good in some way. Nobody saw it coming, anywhere.  People are out of work, anyway, and if the online shopping method is on the rise, some businesses are willing and able to take advantage of it, while those businesses that expanded too far and too fast are in trouble. It isn’t that neighborhood shops will disappear. Those come and go like leaves in the wind. It’s just that things are changing, and change is uncomfortable. Places that were closed up and drowsy are coming back to life, despite the disadvantages they face. Nothing, including disasters, lasts forever.

Category: Economy

Comments (20)

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  1. 11B-Mailclerk says:

    Retail is often thin-margin, thus fragile.

    2020 didn’t introduce major new ways, just shifted habits from one way to another in a sudden jump. The web-not-store trend is over a decade old. More, really.

    Now folks will see the downside of not being able to handle merchandise or try fit pre sale, etc. But vendors may adapt somehow.

    Small business may become largely home business. That has further impacts.

    • Mike Gunns says:

      >Now folks will see the downside of not being able to handle merchandise or try fit pre sale, etc. But vendors may adapt somehow.<

      Personally, I like to be able to try my clothes and shoes on before leaving the store. Buying clothes and shoes on line can be hit or miss because different manufacturers may have different sizing measurements.

      • 26Limabeans says:

        Can’t beat Red Wing boots. Been buying the same
        “made in USA” style for 30+ years and recently rcvd two
        pair ordered last June. Only available thru dealers.
        Perfect fit on the first pair. Same as if it were 30 years ago.
        Two weeks on hoof and all broken in.
        Tower climbing boots. Steel toe, electrical rated.
        Their website comments say Navy pilots wear them.
        Not going there…..
        U.S.A hell yeah.

        • Mike Gunns says:

          Bought my first pair of Red Wing boots a year or so ago. So worth it. And every 30 days if you bring them into any Red Wing store, they will reapply the oil sealer, fix eyelets, new laces and any other repairs needed. I also got the fitted inserts and the tough toe for mine.

          I did read, however, that about 30 to 40% of Red Wing boots are made overseas. From wikipedia:

          As of 2014, there are six sources of manufacture: completely made in the USA, made in the USA with imported materials, assembled in the USA with imported components, made in China, made in Korea and made in Vietnam

          • 26Limabeans says:

            Yeah, I only buy the model 2233, completely made in USA.
            Thankful for the oportunity but also realize they would not be
            in business if not for the different grades.
            I warm them up on the baseboard heat and apply sno-seal.
            You can do that if you live alone.

  2. Sapper3307 says:

    The Bass Pro shop now owns Cabela’s and the Sportsmen Wearhouse.

  3. Mike Gunns says:

    My last job, I worked for a construction company that did work for CVS. CVS is always changing and innovating. Their entire history is about buying businesses affiliated with health care, from Caremark managed health care company to Omnicare, a company that provides medications to long term care facilities.

    They bought out about 1,000 Target pharmacies.
    They purchased Aetna Insurance. Anything that involves health care, CVS is on it.

    Their most recent innovation is called Health Hubs, an expansion of their Minute Clinics. You come into the store and a health care concierge will take you around the store, explain options, ect.

    Some things they tried didn’t work out like their in store optical services and their attempt at providing audiology services. They attempt these extra services as pilot programs in high traffic stores to see if they will work out.

    They have 10,000 stores so they have a pretty big footprint coast to coast plus Alaska and Hawaii.

    • 26Limabeans says:

      Thanks Mike. That explains a lot about what I see in
      my own area. Rite Aid’s and Wallgreens being gobbled up.
      Part D is a big money maker judging by the junk mail
      I recieve along with the usual Medicare Advantage crap
      that is no more than an attempt to make people give up
      their hard earned “original Medicare”
      Never give up Original Medicare. You will not get it back.

      • Mike Gunns says:

        Rite aid is on the verge of going under, as shown in the article. However, Walgreens isn’t going anywhere. They have almost as big a footprint as CVS, as far as the number of stores. Although they don’t own their own health insurance company, through their stores that have clinics, they do offer either free or very low cost treatment for the unemployed or uninsured.

        With 2400 stores, I’m not sure if it would be in CVS best interest to buy them out, mainly because they are already leveraged pretty good with the Aetna purchase and their store expansions. That being said, Walgreens probably doesn’t have the capital to swing it either. According to their 2020 financial report:

        Operating income in fiscal 2020 was $1.3 billion, a decrease of 73.7 percent from the prior year. Adjusted operating income was $5.2 billion, a decrease of 24.9 percent, and a decrease of 24.8 percent on a constant currency basis. The company estimates adverse COVID-19 impact of approximately $1.2 billion.

        If you are interested, here is a link to CVS financials for the 2nd quarter of 2020 https://cvshealth.com/news-and-insights/press-releases/cvs-health-reports-results-2020-q2

        I’m not saying that CVS couldn’t buy out Rite Aid, but that it might not be in their best interest.

        • 11B-Mailclerk says:

          There is considerable economic research that any market without significant disruption or major change eventually settles down to two big players with most of the market, and a handful of small-fry. Cola bottlers, for example.

          Disruptors and new-stuff reset the count, but then that market trends towards “two big and small-fry” consolidation.

          Seems to have to do with economies of scale, competition dynamics, and the human tendency to devolve/simplify almost anything down to either-or. I suspect that last bit, either-or, is due to our split-brain nature. Everyone has a built-in dual nature.

          • Thunderstixx says:

            Although not large, there are many other small cola companies.
            Suyn Drop is my favorite but you can’t get it here in Texas.
            So I found a close replacement bottled by Dr Pepper in San Antonio I drink it because I still take a lot of pills and it’s the only thing I can drink without getting some kind of acid reflux going.
            Wisconsin has a lot of bottlers of both beer and soft drinks.
            And of course the best cheese in the known Universe !!!
            https://www.StarDairy.com

            You have to buy it in the winter from them as they won’t ship in the Summer as it will get wrecked in the back of the UPS trucks !!!

            • 11B-Mailclerk says:

              Apples to apples, national brands.

              Smaller markets are different. Cheerwine is another good regional.

              Energy Drinks are a disruption, as were Sports Drinks.

              It’s not a general case, just a trend in stable mature markets.

              I think we are also seeing a meta-disruption to that 90s vintage observation. Infotech gives greater perspective on where new things could disrupt, thus vastly increases disruptions.

  4. KoB says:

    You knows that things is weird when I am now buying some bits and pieces on line. No choice, when the store don’t have critter food, I gotta do something. Chewy.com will pay the shipping on any order more than $49, it’s usually instock and I have it 2 days later. Price is the same as K Roger or Dollar General. Tried to get the local feed & seed store to put in a line of that stuff; no joy.

    Here’s another sign of the times. Baby Girl just had dropped shipped an order of Tagalongs, Samoas, and Thin Mints Girl Scout Cookies. The Soccer Mom Buddy she bought them from is up the corner and around the street from her. The shipment was very timely in that I am almost out of my Home made ones from Nebraska. It seems the Girls are just writing the order and the shipment is leaving the where ever Hollow Tree they’re made in. I CAN still buy milk at the Piggly Wiggly right down the street. And that’s walking distance.

  5. David says:

    Not vets but a couple notable folks passed. Ed Bruce, who wrote “Mamas, Don’t Let Your Babies (Grow Up to be Cowboys”, “The Littlest Cowboy (Rides Again), “the Last Cowboy Song”, and Tommy LaSorda both died.

  6. Berliner says:

    At Home Depot 99.9% of anything labeled “HDX” is made in China… possibly by forced labor (Uighurs). Apple, Amazon and Tesla suppliers benefit from forced labor.

    When was the last time you saw a Made In USA label, say, in Walmart, or anywhere else. Previously US military suppliers have been caught importing and then adding the Made In USA label to uniforms and equipment after it got off the boat from the homeland of the “ladyfriend” of Rep Swallowswell, D-CA/PRC.

    • rgr769 says:

      I just bought two heavy duty batteries for my diesel pick-up at Sam’s Club and was shocked to see they were made in the U.S.

    • 26Limabeans says:

      My first real job was with Automatic Radio on the assembly line.
      I would “buzz test” the car radio chassis on some box then
      remove the “made in Japan” stickers and place it on a cart.
      Each chassis went on to be inserted into “whatever” brand front panel.
      Every car or tractor radio in America, no matter what brand, went
      through that factory. Delco, Autolite etc. All the same.
      All made in USA!