Every year, Hollywood honors its dearly departed with a moving photomontage during the Oscars. At retail, those leaving or having left the marketplace include KB Toys, Linens 'N Things, Mervyns, Sharper Image and Steve & Barry's.
Unfortunately, most retailers are only remembered in their final stages when they were flailing to survive. But each had a heyday when they scared the competition and millions were invested to open scores of stores across the country. Here is a synopsis of few key defunct chains:
KB Toys: KB Toys opened its first store in 1959 as suburban malls began popping up across the country. Besides a mall focus, the chain was known for its deep bargains displayed prominently at the front of the store. Under the ownership of Melville Corp. in the eighties, it became a major consolidator and grew to more than 1,200 stores. It began to struggle as it faced more off-mall competition from Toys 'R' Us as well as aggressive pricing in toys from Walmart.
Linens 'N Things: Founded in 1975, the retailer's growth spurt came in the late eighties when it switched to a superstore format in becoming the number two U.S. home goods chain after Bed Bath & Beyond. While it benefited from a greater emphasis toward home décor in the nineties as well as an "everyday, low price" model, some retail observers believed the chain never capitalized on the housing boom in recent years as much as its rivals.
Mervyns: Founded in 1949, Mervyn's was one of the early retailers to focus on "value" over store experience. Part of that came from its vaunted private-label apparel program. It was also the only California retailer to publish tabloid advertisements for many years. In the eighties, Mervyns was the primary growth engine for Dayton Hudson, the precursor for Target Corp. Its struggles came as other retailers increasingly copied many of its core principles, including a greater value-focus and private label emphasis.
Sharper Image: Founded in 1977, the retailer was one of the pioneers of the retail-tainment craze, with its vibrating leather massage chairs, robotic vacuum cleaners, and nose-hair clippers. Its first growth spurt in the '80s was driven by a thirst by yuppies for high-priced gadgetry. Its second in the '90s came after it brought in more practical items, such as suitcases and cordless telephones, and was topped off by the arrival of the Razor scooter craze. Although a lawsuit over its Ionic Breeze purifiers was blamed for its bankruptcy, some retailer observers believed the chain focused too much on one-hit wonders to establish sufficient customer loyalty.
Steve & Barry's: Founded in 1985, its growth spurt began in the early part of this decade when it began opening 30 to 40 stores a year to quickly reach over 250 locations. Its success was built on being able to offer $10 t-shirts by using no advertising, importing its own apparel, and selling in volume with lines endorsed by actress Sarah Jessica Parker, NBA star Stephon Marbury and others. Its expansion, however, was allegedly supported by up-front payments by landlords while operations showed scant profits. Despite the scandal, some retail observers believed raising prices slightly higher would have enabled the retailer to shore up its margins with little effect on consumers.
Other chains exiting the marketplace in 2008 included Bombay, Demo (part of Pacific Sunwear), McMahan's Furniture, Metromedia Restaurant Group (owner of Bennigan's), Shoe Pavilion, Value City, Whitehall Jewellers and Wickes Furniture.
Discussion Question: Which of these notable retail liquidations over the last year do you think was most worth saving? What would it have taken to turn the business around?
- 2008 was the year of disappearing brands - The Associated Press/The Boston Globe
- KB Toys - fundinguniverse.com
- Linens 'n Things, Inc. - fundinguniverse.com
- Mervyn's California - fundinguniverse.com
- The Sharper Image Corporation - fundinguniverse.com
- Steve & Barry's, Short of Cash, May Shut Stores - The Wall Street Journal