David and Goliath

I am not one to preach old-time Bible stories, but, (and it’s a big but) I am thinking of the parable of David and Goliath. You all know the story. Granted, my mother would not let me have a sling growing up, but the idea that I, like the humble sheppard boy David, could knock down the bullies at school did have a certain appeal...but I digress. It appears that the world of retail has had a few Goliaths fall into bankruptcy in recent weeks due to the modern equivalent of the sling and stone…the economy.

The “You’ll love it at Levitz” furniture retailer is among the most recent to fall face forward. Americans may have loved it, but filling up their grocery carts and gasoline tanks trumps a three-piece leather sectional. (P.S. Levitz is in arrears to Sealy for 1.4 million.) Like the braggart Goliath, Sharper Image’s tag line was…“For the person who has everything, we have everything else." I presume that includes the $6.6 million they owe to UPS. Now Linens 'n Things (500 stores in 47 states), Lillian Vernon, Harvey Electronics and Wickes has joined the Philistine army.

While further away from bankruptcy, but scaling back or closing units, are 140 Foot Locker stores and 117 Ann Taylor stores. Charming Shoppes who owns Lane Bryant and Fashion Bug will close at least 150 stores. Wilsons “The Leather Experts” will close 158 stores, in spite of their “expertise” and plasticy leather. Pacific Sunwear will phase out 153 demo stores. Zales will lose 100 stores, regardless of their condescendingly successful holiday promotions, “Give her something she’ll never forget” (the $99 forever ring). It proved insufficient from protecting them. Office Depot had hoped to open 150 stores this year, but it has scaled back to 75; J.C. Penney and Lowes are scaling back too.

Samantha Stevens (from "Bewitched") often exclaimed “Dr. Bombay, Dr. Bombay, emergency, emergency, come right away!” and quicker than you could twitch your nose, Dr. Bombay was reciting spells in the living room ablaze in a cloud of purple smoke with a dry martini in hand. Unfortunately, when retailer Bombay--with 360 stores in its chain--encountered a sluggish economy, and an ill-thought-out Bombay Kids, followed by launching a high-priced furniture line, the writing was already on the wall. Still, they elected to move most of their stores out of malls and into open air shopping centers, and their pick-up sales fell to the wayside--no incantation, potion or hex was enough to save the business. And 3,608 employees lost their jobs; the company now has 20 employees left.

So what happened? Well, (big secret, shhhhsh) banks aren’t issuing loans the way they once were. Retailers have long relied on huge bank loans to tide them over till the holidays; those days are gone. Fortunoff with 23 stores, once used it’s product as collateral, with sales so slow, banks considered it not liquid (of any value) and not worth the risk. Fortunoff was sold to the owners of Lord & Taylor. Some companies have not had their fingers on the pulse of the economy, and failed to come up with innovative business strategies to survive tough times. Many companies fail to offer really good customer service. Some companies fail to look at fashion trends, or have seasonal appropriate merchandise in their stores. Some retailers like ostriches with their heads in the sand, still fail to see where America is heading--some suggest discounters and the Internet. Some companies have dull Web sites that are designed to sell, sell, sell only--no room for networking, product reviews, blogs or any meaning interaction. Where is the Facebook or MySpace for retail?

Here’s the point of the story, sometimes it doesn’t matter how big you think you are, it only takes one little thing to bring you down.

--Ron Knoth, Guest Blogger