We are continuously seeing companies, especially in the fashion industry, declare some form of bankruptcy.
However, what no one seems to be considering is that these companies were already struggling prior to the recession caused by COVID-19.
J.Crew was definitely already struggling, mostly due to a buyout. However, from a shoppers perspective, clothes there are expensive, that you can buy at J. Crew Factory or J. Crew Mercantile for a fraction of the price. Plus, there is always a sale, so why buy anything full price?
J.C. Penny was also already struggling, along with Neiman Marcus. Pier 1 has actually been in the process for a while of shuttering stores, just without the formal filing for bankruptcy. The store here in Charlottesville closed last year.
Here’s a list of companies that have filed for bankruptcy this year.
Now, I am not an economics person in the least; however, I can tell you some of the things from a consumer perspective that caused the demise of these companies:
- Constant sales. I mentioned this previously, but if a store is always holding a sale, I don’t feel the need to ever pay full price. In fact, I will often sale watch until it’s a least 40% off.
- Giving deals online but not in store. This crushes a business’s brick and mortar sales because everyone will want the sale price. If you can’t get a price match in store, they will turn right around and order online.
- Not diversifying. If you offer the same thing year after year, typically people don’t need to keep repurchasing. Obviously, staple items are a must, like the J.Crew pixie pants. I love them, and I will continue to buy them when I need a new pair. Lilly Pulitzer keeps similar silhouettes but changes the prints. This is still diversifying but staying true to the brand.
- Poor customer service. Y’all, I am a tried and true Nordstrom shopper for life (even if they close the Richmond store) because of their customer service. I don’t necessarily have to get my way, but I must feel like I’m listened to.
- No Rewards Program. J.Crew offers rewards with their credit card; however, there is not a blanket reward program with just an email. Store cards are often not a great investment because you may only be able to use them in that one store (like with J. Crew). Often times you’re better off to get a credit card through Visa or Discover and reap their benefits, like cashback.
There are obviously a ton of other factors, like what is carried in the store, location, etc. that also play a large part in the success of a store.
Overall, these companies may be bankrupt now; however, this recession was not what actually caused this. They have been on the downfall for months, if not years, prior to this recession. Some of these stores will be on the comeback; others not so much.