Styles For Less Bankruptcy: Another Casualty of Online Retail
Fashion apparel retailer Styles For Less is preparing to file for Chapter 11 bankruptcy as it becomes the latest casualty of America’s evolving consumer patterns. The Styles For Less bankruptcy is the latest retail bankruptcy in 2017 owed to the rise of digital retailers.
The Anaheim, California-based company sells clothing and accessories to teenage girls and young women. It has been in business for more than 20 years. The retailer currently employs about 600 people.
The timing of the Styles For Less bankruptcy seems rather odd, considering that this is the time that retailers are gearing up for the busy holiday season. Most retailers would want to cash in on the holiday shopping season one more time before filing for Chapter 11 bankruptcy. However, the company’s decision to seek bankruptcy protection sooner rather than later indicates its dire straits.
Like most other retail bankruptcies we’ve seen this year, this one is being blamed on the rise of digital retail. More Americans are choosing to shop online, and there’s little that the company can do in the next two months to adapt to the new reality.
Styles For Less Bankruptcy Follows Long List of Retail Bankruptcies in 2017
The shift in American shoppers’ preferences has occurred over the past decade, particularly as e-commerce giant Amazon.com, Inc. emerged as a strong force in online retail.
Online retailers, who are better positioned to offer bargain prices, due to their unique business model, have managed to claw away the market share of traditional retailers. Since e-commerce companies don’t have to bear the overhead costs related to running a brick-and-mortar store, they are able to undercut retailers who operate out of physical stores.
The consequences are obvious: brick-and-mortar retailers are being forced to shutter their underperforming stores as their costs outpace their sales revenue.
Likewise, Styles For Less is down from 160 stores to about 100 as it continues to shut down loss-making outlets. The chain mostly operates its stores out of malls, and the drop in mall traffic (owing to the loss of major mall anchors) is another factor contributing to its declining sales.
The Styles For Less bankruptcy follows many other retail bankruptcies we’ve witnessed this year. Famous apparel retailers that have gone bankrupt in the past year include once-popular names like Ascena Retail Group Inc; BCBG Max Azria Group, LLC; bebe stores, inc.; The Gymboree Corporation; Payless ShoeSource, Inc.; rue21, inc.; True Religion Apparel, Inc., and Wet Seal, LLC. Nearly all of these companies owed their demise to the growing trend of online shopping.
With retailers going bankrupt left, right, and center—and stores closing at a record pace—employees of the retail industry have turned out to be the biggest losers. America’s retail industry has shed tens of thousands of jobs this year, and the trend is likely to continue.
“U.S. retailer Styles For Less prepares to file for bankruptcy: lawyer,” Reuters, November 1, 2017.