On March 10, Gander Mountain announced it was filing for Chapter 11 of the United States Bankruptcy Code. This comes on a wave of other Chapter 11 filings this year, including Wet Seal, hhgregg and The Limited. According to a press release, Gander Mountain is citing “challenging traffic patterns and shifts in consumer demand resulting from increased direct-to-customer sales by key vendors and accelerated growth of e-commerce,” a growing concern for many brick-and-mortar stores that haven’t made a significant leap into the digital space. While its website continues to run, Gander Mountain will be closing 32 of its stores in the near future.
Gander Mountain says in the press release that it is “in active discussions with a number of parties interested in a going-concern sale and expects to solicit bids prior to an auction to be held in late April 2017.” No layoffs are expected until the store closures begin “in the next several weeks.” With Cabela’s laying off employees and closing a call center as they are acquired by Bass Pro Shops, the future of outdoor sportsman retail chains looks shaky.
2016 and 2017 have so far proved rough years for retailers struggling with the physical location/e-commerce balance. American Apparel filed for bankruptcy first in October 2015, then again in November of last year, and was finally auctioned to Canadian T-shirt and underwear maker Gilden Activewear Inc. It’s still uncertain what will happen to the company’s 4,700 employees and 110 stores, as Gildan spokesman Garry Bell said they’ve “never been in a position to be able to assume operations.” Since last year’s filing, some stores have been liquidated, and the website currently states that this is the “final week to shop online.” Similar stores like Urban Outfitters and Alternative Apparel are decent alternatives to American Apparel for shoppers looking for a replacement, although neither have domestic manufacturing.
The Limited, which filed for bankruptcy in January, has already closed all of its 250 stores and shut off its website, citing “declining mall traffic, falling sales, expensive leases and the shift toward online shopping.” It was purchased by Sycamore Partners in February, and they have stated they plan “to reintroduce the brand to the marketplace at a later date and will communicate with The Limited’s loyal customers about how to obtain the merchandise they know and love.” For The Limited customers who are wondering where they can get similar styles in the meantime, Express and Ann Taylor are good alternatives. Wet Seal also filed for bankruptcy for its second time in February and was purchased by Gordon Brothers, an investment firm that intends to “rebuild and reposition the brand” going forward.
Most of the stores filing in the last six months are women’s clothing retailers (including fast fashion darling Nasty Gal), but hhgregg, an electronics retailer considered Best Buy‘s main competitor, filed earlier this month just after announcing the closing of 88 stores across 15 states. An anonymous party had purchased hhgregg’s assets, but the sale fell through. Hhgregg is currently shopping for a new buyer, and their remaining 132 stores will stay open during the restructuring process.
Department stores are also feeling the e-commerce sting: Gordmans filed for Chapter 11 March 13 with a total debt of $131 million and issued a statement that it has reached an agreement with Tiger Capital Group and Great American Group “for the sale in liquidation of the inventory and other assets of Gordmans’ retail stores and distribution centers.” Gordmans’ online presence was never one of the strongest, likely contributing to their falling sales and decision to file Chapter 11. Gordmans operates 102 stores in 22 states, and its website insists that, for now, they will continue “business as usual.” Shoppers looking for alternatives in the future could look to other department stores like T.J. Maxx or Marshalls for their needs.
As of March 31, Gordmans has been purchased by Stage Stores Inc., the parent company of Bealls, in a move they say is a “natural complement” to their department store presence across the South and East Coast. Stage Stores Inc. will be keeping 50 Gordmans stores open and hiring a significant amount of their retail employees on rather than laying them off. The other stores will be liquidated and closed. There is no current list of which stores will remain open, but we will keep you updated.
All of these bankruptcy shakeups are happening during Walmart‘s rapid acquisition of e-commerce marketplaces and retailers like Jet.com, Moosejaw Mountaineering and ModCloth, as well as Amazon‘s expansion into physical locations, like book and grocery stores. REI is seeing record sales, ending last year at $2.56 billion, with digital sales rising 18%. As e-commerce becomes ever more important for a company’s success, we may see more retailers filing for bankruptcy because they can’t keep up with the changes. With all the sales and restructuring of beloved brands like The Limited and Gander Mountain, shoppers have a right to be worried about the landscape of local malls and shopping centers that are losing their anchor stores to closings, like JCPenney‘s and Sears‘.