FOUR stores have filed for bankruptcy amid a nationwide “retail apocalypse.”
With consumer spending constrained by soaring inflation rates, brick-and-mortar stores are feeling the pressure.
In-store consumer spending has declined since the coronavirus pandemic drove online shopping.
Even once powerful top brands like Bed Bath & Beyond and Tuesday Morning are struggling to stay afloat in the current economic climate.
One expert said that despite inflation, consumer spending hasn’t fully declined, but the trends behind spending are changing.
“Consumers continue to spend, but how and where they spend is changing,” Greg McBride, Bankrate’s chief financial analyst, told The US Sun.
“In retail, more spending is being done digitally and less in physical stores,” he added.
Foot traffic has decreased dramatically due to the increasing number of home workers.
According to McBride, this shift, along with the increase in consumer spending towards services and away from goods, has hit brick-and-mortar retail in particular.
“The increase in credit card balances and the number of cardholders who have balances is a by-product of inflation, which has strained many household budgets beyond the breaking point,” the expert said.
“How much consumers are spending needs to be viewed from the perspective of inflation – consumers are spending more but not getting more. Millions use credit cards just to make ends meet.”
As shoppers look for ways to make their money, the once-thriving brick-and-mortar stores just can’t keep up.
The US Sun has compiled a full list of companies that have filed for bankruptcy in recent years.
1. TUESDAY MORNING
Housewares store Tuesday Morning filed for bankruptcy in February and shortly thereafter announced the closure of half of its retail locations.
At least 860 stores have reported their impending closures in 2023, but that’s likely just the beginning of the burgeoning retail ice age.
Stores in states like California, Florida, Georgia, Maryland, Nevada and Nebraska will close this year.
The chain’s first closures occurred in May 2020 following the initial filing for bankruptcy protection. At that time, the retailer lost 230 locations.
While Tuesday Morning finally emerged from bankruptcy in December of this year, the company has still struggled since.
For the fiscal year ended July 2, 2022, the store lost $59 million, followed by another $28.1 million in the first quarter of the current fiscal year.
The company said filing for bankruptcy “will allow the company to reduce its outstanding debt, preserve significant and necessary capital and ultimately transform itself into a more flexible retailer that serves traditional markets in a profitable manner.”
2. PARTY CITY
While party supply store Party City was thriving before the pandemic, the coronavirus outbreak impacted both the store’s in-person events and financial performance.
Since filing for bankruptcy, the business has offered twelve locations for auction.
Under a $150 bankruptcy loan, the chain said it would continue operations while restructuring its debt burden.
As of September 2022, Party City was $1.7 billion in debt but was working to build a smaller and more successful fleet of stores.
The popular department store filed for bankruptcy in May 2020 and announced the closure of over 800 stores.
Unfortunately, the company had suffered $4.5 billion in net losses since 2010.
Today there are just 670 JCPenney stores, and more stores are slated to close this spring, including those in Oswego, New York, and Elkhart, Indiana.
Simon Property Group and Brookfield Property Group have agreed to acquire the chain for $1.75 billion.
4. BED BATH & THIS
Bed Bath & Beyond executives have said the homewares giant will close all 360 stores after filing for bankruptcy in April.
Additionally, all of the company’s 120 buybuyBABY locations will also perish.
There is one bright spot for shoppers, however: as Bed Bath & Beyond stores close, products are being discounted at discounted prices.
In Bradenton, Fla., a Bed Bath & Beyond store advertises 10 to 40 percent off all merchandise.
According to the information, this includes all home, baby, beauty and wellness products The Bradenton Herald.
Up to 30,000 jobs could be lost as a result of the branch closures.
The company originally hoped to avoid store closures, saying it would refrain from closing stores if a buyer were found.
Bed Bath & Beyond was around $5.2 billion in debt when the company filed for bankruptcy.
MORE RETAIL PROBLEMS COMING
As well-known national chains and family businesses alike struggle with the current retail environment, another financial expert has predicted which stores are likely to be hit the hardest next.
Andrew Lokenauth, a Tampa-based financial analyst and now founder of personal finance media platform Fluent in Finance, said there are several reasons driving the “perfect storm” of closures hitting retailers across the country.
“It was compounded by the excess money we printed during the recession,” Lokenauth told The US Sun.
“When you print that much money, it has to be put back into the economy.”
The smaller companies are unable to keep up with the price hikes and it is inevitable that many will be forced to close their doors, Lokenauth said.
However, even in the harsh environment, some chains are likely to fare better than others in the coming months.
Some retailers could be largely unaffected by the closure trends, especially if they’ve created market appeal through their discounts.
Lokenauth said stores like Dollar General and Five Below will continue to do well, as will stores that sell luxury goods like Nordstrom.
This is because their customers will maintain their spending patterns whether there is a recession or not.
In fact, businesses that have built brands that cater to everyday middle-class Americans are most at risk, the expert said.
“I think the businesses that are in the middle for America’s middle class may not do well because people will try to save,” Lokenauth said.
A giant chain with 1,200 stores and a major rival to Hooters have shut down a store after a series of other closures.
Meanwhile, a popular Italian restaurant and Olive Garden competitor is also closing its doors after 15 years.