5 Retailers That Could Be At Risk In The Future
With retailers shuttering stores left, right, and centre and a retail apocalypse looming over the industry, shoppers are at risk of losing their favourite brands.
In some cases, looks can be deceiving. Some brands are plagued by misconduct scandals, tarnished reputations, or seemingly never-ending debt.
Here are 5 retailers that could be at risk in the future.
Back in 2011, Hudson’s Bay partnered with Topshop to launch the British high street fashion brand in Canada and it was greeted with much excitement. But as the years go on, competition grows and scandals arise. Analysts think the once-desirable brand could be at risk. Last year, Topshop’s owner Sir Philip Green was hit by multiple allegations of sexual misconduct, resulting in a boycott of the brand and Beyoncé to remove her Ivy Park label from stores.
In addition, one area where Topshop excelled is now being met by loads of competition: its ability to churn out runway-inspired clothing before anyone else. With the rise of social media, brands have quick access to high fashion and celebrity-inspired trends faster than ever, and retailers like Fashion Nova, Boohoo, and Forever 21 are offering similar styles for more budget-friendly prices. In the past couple of years, Topshop has seen store closures across the globe. And in 2018, the brand suffered from plummeting sales.
While we don’t know what the future holds for Topshop, Canadian locations remain open. But it is interesting to note that last year, Hudson’s Bay shareholders pushed to “better utilize” store spaces by selling the company’s real estate and also reported a net loss of $124 million at the end of 2018.
For the past few years, J.Crew has been quietly closing stores across Canada, including a Toronto location that was deemed to be one of the brand’s most profitable. Initial excitement of the retailer’s launch in 2011 helped J.Crew gain some momentum, but unfortunately, a past decision still haunts the brand.
With help from TPG Capital and Leonard Green & Partners, J.Crew was able to take the company private in 2011. However, since the $3 billion leveraged buyout, the retailer has been drowning in debt. Last year, the Washington Post reported that J.Crew had nearly $2 billion in debt.
J.Crew sales have tumbled for more than three years, and in addition to the debt, the company’s merchandise suffers from poor design and inconsistent quality, resulting in once-loyal shoppers abandoning the brand. With only three full-price stores left in the greater Toronto area, it will be interesting to see what’s ahead for the brand.
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Gap Inc. as a whole may not be struggling, but signs show that its namesake brand is. Near the end of 2018, the brand told analysts that it would be closing hundreds of stores across the globe. And this isn’t the first time the brand has done massive closures — back in 2015, Gap closed 175 stores across North America.
But while Gap struggles to find brand loyalty and a captivated audience, Gap Inc.’s lower-priced brands are flourishing. In fact, GlobalData Retail Managing Director Neil Saunders told Retail Dive that Old Navy, under the Gap Inc. umbrella, continues to attract family shoppers and will actually add new stores.
Analysts believe that Gap’s issue lies in what it sells. “Gap’s issue has always been about product and, by extension, price. They have never really got to grips with producing a compelling range that is interesting to customers and is worthy of a higher price point.”
Overall, Gap Inc. is in a reasonable state, however, if Gap isn’t able to pull itself out of its slump, analysts believe it will continue to drag the company down.
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The vitamin and supplement retailer has been a mall staple for time, but back in 2018, many media outlets predicted a rocky future for the brand. With growing competition — both Costco and Walmart are able to sell bulk supplements at lower costs — and lawsuits that questioned the efficiency and safety of GNC’s supplements, GNC’s popularity has dropped.
In the spring of 2018, the retail chain announced it would be closing 200 out of the 3,385 stores it operated across Canada and the United States. According to PSFK, the company’s revenue has been on the decline for 11 consecutive years.
As of right now, the company is planning a turnaround, with the invention of a new experiential store format. The new store is said to be a one-stop shop for health and wellness needs, and will give customers a more customized experience with additions such as a Smoothie Lab, InBody Body Composition Analyzer, and free, in-house consultations by registered dietitians.
However, analysts aren’t convinced that a few new additions will help GNC, which suffers from a massive pile of debt — a whopping $1.38 billion in 2018.
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After successfully pulling itself out of bankruptcy in 2017, the children’s wear retailer is struggling again. According to the Wall Street Journal, Gymboree Group Inc. is allegedly “shopping for a bankruptcy loan as it prepares for a second Chapter 11 filing.” The company is allegedly seeking a bankruptcy loan to keep some stores open while searching for a buyer.
If Gymboree is successful in its filing, it’s likely that shoppers will see the brand close the majority of its 900 stores across the globe, including eight locations in the greater Toronto area.
Analysts attribute the company’s downfall to its collection of children’s apparel brands that were “cannibalizing each other.” Gymboree recently shuttered its Crazy 8 outposts, but continues to operate Gymboree and Janie and Jack stores for now.
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Featured image: Instagram/@jnetibles