Retailers are filing for bankruptcy at a record rate as they try to cope with the rapid acceleration of online shopping, Bloomberg News reported yesterday. In a little over three months, 14 chains have announced they will seek court protection, according to an analysis by S&P Global Market Intelligence, almost surpassing all of 2016. Few retail segments have proven immune as discount shoe-sellers, outdoor goods shops, and consumer electronics retailers have all found themselves headed for reorganization. Meanwhile, America’s retailers are closing stores faster than ever as they try to eliminate a glut of space and shift more business to the web. S&P blamed retailer financial struggles on their inability to adapt to rising pressure from e-commerce. Urban Outfitters Chief Executive Officer Richard Hayne said as much on a conference call with analysts last month. There are just too many stores, especially those that sell clothing, he said. “This created a bubble, and like housing, that bubble has now burst,” said Hayne. “We are seeing the results: Doors shuttering and rents retreating. This trend will continue for the foreseeable future and may even accelerate.” Read more.
In related news, suppliers are becoming increasingly concerned they won’t be paid for the goods they ship to struggling or bankrupt retailers, and they’re taking more aggressive steps to protect themselves, Bloomberg News reported. “Vendors are getting extraordinarily nervous,” said Hilldun Corp. Chief Executive Officer Gary Wassner, whose firm finances fashion suppliers. He now gets two or three extra calls a day from worried manufacturers that sell to retailers, including luxury stores. Bankruptcies at Payless, Gordmans Stores, Wet Seal and RadioShack’s ill-fated successor General Wireless have rocked the industry this year. Chains such as Bebe Stores Inc. have made plans to shut their brick-and-mortar locations. And Sears Holdings Corp., once the world’s largest retailer, warned investors last month that there was “substantial doubt” about its ability to keep operating. Read more.
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