Even though consumers spent a record $638 million in stores and restaurants in October, the global pandemic has taken its toll on retailers. As many Americans sheltered in place, retail sales plunged a record $54.4 million in April 2020, and, despite several rebounds, retail sales posted drops in February, May and July of 2021, according to the U.S. Census Bureau.
In May 2020, J. Crew became the first big name to file for bankruptcy protection amid the current coronavirus outbreak. Neiman Marcus and J.C. Penney soon followed suit. In February 2021, the last Lord & Taylor store closed, although the company was purchased by the Saadia Group and opened an online-only store in April 2021.
Of course, retailers’ troubles started long before COVID-19 concerns began to pile on. Indeed, in 2019, more than 9,500 stores closed, according to Coresight Research. That was 60 percent more than the year before and continued a years-long trend of closures as businesses were rethinking their brick-and-mortar presence and adjusting to the ubiquity of online shopping.
But the pandemic is now really pushing the point home, and forcing retailers to use new strategies to reach consumers. A survey by Deloitte in May 2021 found that companies that allow consumers to buy online and pick up in-store (BOPIS), or that offer curbside or home delivery, have fared better than those that haven’t. In particular, the survey said, older consumers like BOPIS because it allows them to support local businesses.
Which brands will make it to the other side of this unprecedented situation? Looking back to see how former big names fell from grace might offer some insight. The following retailers surely had unique struggles, but often their collapses boiled down to overexpansion, too much debt and a failure to keep up with changing trends. See what lessons your favorite retailers of the past can offer to all the businesses currently facing an uncertain future.
What happened: Netflix. While the video-rental chain dominated the '90s, crushing all mom-and-pop shops, it failed to keep up with industry changes. Netflix came on the scene in 1997 as a DVD-by-mail rental service, which took Blockbuster five years to replicate. Then, Netflix moved on to streaming, and Blockbuster buckled. It filed for bankruptcy in 2010 and officially shut down in 2014.
Current status: The last Blockbuster still stands in Bend, Oregon, but it operates independently and is not a part of Blockbuster LLC, now owned by Viacom. Got it? Even more confusing, the famously funny tweets that come from @loneblockbuster, which portrays itself as “The Last Blockbuster,” don’t actually originate from the Oregon video store. On the other hand, the Oregon Blockbuster has survived the pandemic, and has managed to keep all its staff employed.
2. Tower Records
What happened: No digital; no sales. Tower Records ruled the retail music business from the ‘70s through most of the '90s, with some of the industry's biggest stars — including Bruce Springsteen, Dave Grohl and Elton John — frequenting its stores and pushing its slogan, “No Music, No life.” Unfortunately, it was already struggling with debt when record sales began to plunge and consumers increasingly turned to online sources for music. In 2004, Tower Records filed for bankruptcy, and in 2006, digital technology officially killed the record store megachain in the U.S.
Current status: A few stores are still around outside the U.S., in Ireland and Japan, including a nine-story Tower Records in Tokyo, owned by franchisees. And you can still order albums (vinyl and cassettes) and merchandise online at towerrecords.com.
3. Toys R Us
What happened: Toys R Us didn't grow up to keep pace with its changing industry. As the toy giant took on more and more debt, it didn't work on improving the in-store experience and couldn't compete against the rise of big-box stores such as Walmart and Target and online retailers like Amazon. Toys R Us filed for bankruptcy in 2017 and closed its stores in 2018.
Current status: Not giving up. The brand's parent company, Tru Kids, opened a couple of new stores in the U.S. that aimed to offer a more modern shopping experience, but those closed in January 2021. You can still be a Toys R Us kid online at toysrus.com; the site redirects you to Target.com when it's time to purchase.
What happened: Fotomat's business seemed picture-perfect in the '70s, when customers enjoyed the efficiency of dropping off their film for overnight development at a golden-hutted kiosk, located conveniently in a parking lot near you. But one-hour photo processing and then digital photography drove out the need for the drive-through developer. By 1990, only about 800 huts remained, down from a peak of 4,000. Fotomat officially closed in 2009.
Current status: Remembered in the still frames of our minds.
What happened: Once the go-to spot for CB radios and other hot gadgets of the day, RadioShack failed to keep its inventory fresh or its shopping experience up to date, as electronics retailers like Best Buy and then Amazon increasingly ate up market share. The retailer filed for bankruptcy in 2015 and again in 2017, when it closed most of its stores.
Current status: You can still buy batteries, radios, robotics kits and other specialized electronic equipment online or at nearly 500 locations in the U.S., many of which are dubbed Radio Shack Express and located inside a HobbyTown.
What happened: A top stop for teenage mall rats of the '80s and '90s, Gadzooks was a popular supplier of the era's fashion trends, including Doc Martens footwear, baggy JNCO pants and No Fear T-shirts. As years passed, consumer tastes changed, and this store fell out of style. The retailer filed for bankruptcy in 2004 and, in 2005, was acquired by Forever 21, which absorbed its inventory and shut down its stores.
Current status: Defunct. (Forever 21 lives on, despite its own bankruptcy filing in 2019.)