As retailers like Claire’s Stores and Toys ‘R’ Us file for bankruptcy, local experts say “specialty stores that don’t play up the experience of shopping are having a hard time competing with online retailers.”
Claire’s Stores, a fashion accessories chain, filed for bankruptcy this week. The retailer and its affiliates have filed for bankruptcy in United States Bankruptcy Court for the District of Delaware. The move could help with Claire’s $2 billion debt load. “Claire’s is growing, not shrinking, its business. The company expects its concessions business to grow by more than 4,000 stores in 2018,” the company said in a statement.
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Claire’s isn’t the only retailer to file bankruptcy recently. Toys ‘R’ Us also filed for bankruptcy and plans to liquidate all of its stores in the U.S. Toys ‘R’ Us Inc. voluntarily filed for relief under Chapter 11 in September 2017. The retailer was $5 billion in debt as of April 29. At the time of bankruptcy, the company said it would close about one-fifth of its store locations. Closing sales are expected to conclude in April.
Randy Sparks, marketing professor at the University of Dayton, said Claire’s closure is indicative of a larger trend happening with specialty stores. If consumers can buy items online, then they will, he said.
“For products that consumers feel pretty comfortable buying without trying that they feel a good deal of familiarity with the online experience is fine because convenience tends to trump everything,” he said. “What people want is they want their time to be filled with experiences and if shopping isn’t an experience then they don’t shop. They’ll just sit online and do it in a very utilitarian kind of fashion.”
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More than 12,000 stores are expected to close in 2018 — up from roughly 9,000 in 2017, according to Cushman & Wakefield, a marketing and data analysis firm.
“I think the early part of next year will be pretty bad … I think it will be tough,” Charlie O’Shea, Moody’s lead retail analyst, said.
The retail industry, which supports one in four American jobs, is undergoing major changes as consumers shift their focus to online shopping. Dozens of retailers filed for bankruptcy in 2017, and thousands of store locations closed across the U.S.
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For some younger consumers, malls have lost their appeal as the primary destination for shopping. Brooke Larney, a fourth-year finance student at the University of Dayton, said she hasn’t shopped in a store like Claire’s since middle school.
“I think we just need to move away from the brick and mortar stores and especially with amazon just taking over,” she said. “I never go to malls. I kind of just go online for anything I need and it delivers in two days.”
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