The retail apocalypse rages on: Sears files for bankruptcy

Sears Holdings filed for bankruptcy this week, as what many consider the ‘retail apocalypse’ continues following bankruptcy of Toys R Us, Nine West and others over the past year.

Key Takeaway

It’s not a great time for the retail industry in the US. 2017 and 2018 have claimed countless bankruptcies, as retailers struggle to meet the demands of the modern economy and consumers continue to turn to e-commerce and Amazon, demanding more personalization, while discretionary spending sees a decline.

Last year, we saw the impact reach across the retail sector when Toys R Us filed for bankruptcy in September, launching a ripple effect that continues to be felt.

This week, Sears Holdings, the next victim claimed by what many are calling the ‘retail apocalypse’, filed for bankruptcy. CNN reports the 132-year-old ‘sell-everything-to-everyone’ giant, once credited with transforming the way Americans shopped, failed to meet its $134 million debt payment, which was due Monday. Sears Holdings is the parent company of Sears and Kmart, among others.

The retailer plans to close at least 142 of its stores this year, and CEO Eddie Lampert has stepped down. According to the filing, the company was losing about $125k per month and has lost $11.7B since 2010.

quick look at the current state of some stores indicates just how deep the trouble lies.

Once an influencer, the brand launched in 1886 and introduced the game-changing Sears catalog, an initiative that shaped the way many Americans started to buy mass-produced goods. “Sears brought people into malls, contributing to the suburbanization of America in the post-World War II era. Its Kenmore appliances introduced many American homes to labor-saving devices that changed family dynamics. Its Craftsman tools and their lifetime guarantees were a mainstay of middle-class America.”

But the brand failed to look out at what its competitors were doing, and were consistently beaten in price and convenience by Walmart and others – even before Amazon entered the scene.  “It’s a sad day for American retail,” said Craig Johnson, president of retail search and consulting firm Customer Growth Partners in the New York Times. “There are generations of people who grew up on Sears, and now it’s not relevant. When you are in the retail business, it’s all about newness. But Sears stopped innovating.”

Sears is just one among a number of US retailers that have failed to keep up with the changing space and filed for bankruptcy over the last year. Here’s a look at some of the other major apparel and accessory companies that are following suit:


(Oct 2018)

The Bon Ton Stores

(August 2018)


(August 2018)

National Stores

(August 2018)

Nine West Holdings

(April 2018)


(March 2018)

The Walking Company

(March 2018)

Kiko USA

(January 2018)

Toys R Us

(Sept 2017)

Meanwhile in the UK, High Street has also been seeing a downturn, recording its sharpest decline this year since 1995. House of Fraser, New Look, Marks & Spencer, Debenhams and more are facing financial troubles and closing stores.

Looking out: the reasons behind rough times in retail

Foot traffic in shopping malls has declined significantly

Credit Suisse predicted in 2017 that 20-25% of US shopping malls would close in the next 5 years.



Let’s not ignore the elephant in the room. Amazon has undoubtedly changed the retail game forever, as e-commerce continues to climb in consumer preference. In the UK, one in every five pounds spent on retail takes place online, with e-commerce accounting for 19.1% of retail sales. While the US is significantly more behind at 9%, e-commerce sales grew by 16% in 2017. Nearly 50% of that comes from Amazon.


The decline of the department store

It’s no longer feasible for all-encompassing retail giants like Sears to continue to operate in today’s retail climate. What’s more, rent and warehouse space continues to surge in cost. More and more department stores are consolidating, shifting to services or investing in e-commerce in an effort to remain relevant and cut costs.


Shifting consumer behavior

Customers are increasingly demanding a more personalized experience and more seamless connection between offline and online shopping. When we’ve grown accustomed to predictive engines like Amazon cutting through the noise to show us exactly what we’re looking for, the overwhelming experience of walking into a department store riddled with racks and racks of hangers is losing its appeal. Consumers have grown impatient and expect increasing personalization.


Millennials are coming into their own, and they’re spending less on ‘stuff’

Millennials today prioritize value and experiences over spending for the sake of it. They’re more informed about where their clothing comes from, less susceptible to the ultimate bargain and crave uniqueness in a way older generations never have. They also prefer to spend on experiences rather than accumulate things. Even though their income is rising, they’re also spending less on these items as a whole. According to a recent Gallup poll, “18- to 29-year-olds today spend nearly $20 less every day than their counterparts roughly 10 years ago, particularly on items like apparel.”

One major factor is the fact that, particularly in the US, millennials are riddled with debt from an early age due to the high cost of education. According to Bentley University, the total student loan burden in the US today currently tops $1.2 trillion, and has tripled in the last decade, at an interest rate of up to 12 percent. This translates to less discretionary income, even if salaries are higher.


New methods of shopping

Today, walking into a brick & mortar store is far from the only option when it comes to meeting fashion needs. Leveraging the ‘borrow’ model made popular by today’s sharing economy, offerings like Rent The Runway have spiked in user growth. Subscription models like Stitch Fix deliver customized fashion straight to your door. And specialty outlets offering complete customization like Bonobos tackle the peril of choice.

The fight to keep brick & mortar alive

Everything today is becoming experience-driven. Voice-enabled shopping is ramping up via home assistants. Product recommendations are becoming increasingly accurate, and companies like Lyst are working to cut out much of the hassle when it comes to the way we search for options online.

In the physical space, tech innovators are attempting to crack what have been major challenges in terms of customer targeting: connecting the offline consumer with his or her online persona, as well as improving the in-store experience to keep them coming back.

Pepe Jeans is bringing in new tech at their recently launched London flagship store, with interactive dressing rooms that incorporate RFID (radio frequency identification) technology. This allows the store to tag each item of clothing, automatically detecting what a customer brings into the changing room. Customers can see “styled full-look images of the garment they are trying on on an interactive screen. It also links the customer to the sales assistant so that he/she can request another size without having to leave the changing room.”

Unlike mass retailers and department stores, the physical outlets for major brands like Nike and Adidas are seeing more investment in tech and innovation. Rather than big opportunities for revenue, these stores are increasingly viewed as billboards for the brands. Steven Dennis argues in Forbes that looking at store sales as a measure of performance may not be the most effective metric, as in many cases, “Stores serve as showrooms that drive customers online. [They] serve as fulfillment points for e-commerce operations.” The store effectively becomes a hangout space, offering an experience customers can’t get online.

Quartz reports that Nike’s New York location, for instance, “features a mini in-door basketball court, a treadmill set in front of monitors that simulate runs in different locations, and a small soccer enclosure.” Meanwhile, Adidas is tackling customization by offering “a pop-up that uses a body scanner and 3D-knitting machine to make custom sweaters in a matter of hours.”

What’s next?

While studies predict that 83% of goods sold globally will continue to take place in store through 2022, the game is changing. Soon there may not be a place in the market for big box retailers like Sears and Toys R Us, as the world turns toward specialization. Brands must actively work to attract customers from the crowd and find new ways of capitalizing on the traffic they do find in store.

Those looking out at innovators from IKEA and Wayfair in the furniture space, to ASOS, Stitch Fix and FarFetch in the fashion space, can see the trends beginning to take shape. But it might already be too late for many. Will we soon see a time where the big box department store is a relic of the past?

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