CNBC reports that "bankruptcies have piled up in the retail industry this year, as many of the consumer-facing companies that were already teetering on the edge of survival prior to the coronavirus pandemic were pushed into even bigger sales slumps, and could not manage through the crisis. And analysts say another wave of filings likely lies ahead, after the holiday season, with the size of that wave dependent upon retailers’ performance through the winter months."
However, the story notes, that doesn't mean these bankrupt retailers are vanishing.
CNBC writes that "a number of the retailers that have filed for Chapter 11 bankruptcy protection this year have already emerged, in some form or fashion. Typically, that is with fewer bricks-and-mortar stores, as many companies will use the restructuring process to break leases without penalty to slim down their real-estate portfolios … A Chapter 11 filing is, simply put, a way for troubled companies to slash unprofitable assets and burdensome debt, while their management team remains in control of the business. And a bankruptcy court oversees the negotiating process with landlords, creditors, vendors and other involved parties."
- KC's View:
A thought here, at the risk of being overly simplistic. (I'm sure you'll tell me if I am.)
There may have been a time when retailers would file for bankruptcy protection as a way of getting their finances in order - it would give them some breathing room in which to quite literally reorganize.
But today, I suspect, the process may be even more challenging … it isn't just a matter of reorganization, but sometimes even re-conceiving the very nature of the business, of figuring out not just how the business fits into present circumstances, but the future. And, you're doing it at a time when the pace of change is faster than ever.
When I look at the list of retailers have have declared bankruptcy, I generally ask myself, "Do they have the kind of vision and are they doing the hard work necessary to turn their companies into mid-21st century retailers?"
Because if they don't and if they aren't, then they may just be putting off the inevitable.