The Grand Central Mall in Vienna, West Virginia, will be seeing its Elder-Beerman store shutting its doors in January of 2018. The timing of the store closure is aligned with its lease expiring at the end of January.
This will result in 54 Elder-Beerman layoffs in January. In addition, the closing of the store will impact its parent company Bon-Ton Stores Inc. (OTCMKTS:BONT), lowering its overall market share.
Elder-Beerman operates as a department store and is not benefiting the mall as it once did in the past. If this news broke out 15 or even 30 years ago, it would have been a shock. It would be especially devastating for employees receiving their pink slips. The announcement of the store closure now, on the other hand, is not a surprise at the end of the day, thanks to the Internet.
One reason for the closure of Elder-Beerman is increased competition from new segments in the retail market. For instance, Wal-Mart Stores Inc (NYSE:WMT) has held the title of being the world’s largest retailer, yet the company continues to grow its market cap and size. This is due to the fact that the management team has been investing more in its e-commerce business and less on the physical side of the business.
This has resulted in WMT stock still being in the conversation as other retailers have emerged within the last two decades such as Amazon.com, Inc. (NASDAQ:AMZN). Unfortunately, the same cannot be said about Elder-Beerman and its parent company, Bon-Ton stores.
The real evidence of the management team not looking toward the future and making changes to the business model is seen in the BONT stock price. Bon-Ton Stores is a public company that was trading above $50.00 a share back in 2007. Today, the stock is considered a penny stock, trading below $0.50 per share.
Now, of course, there is always a chance to turn things around and keep the retailer alive if the management team chooses this route. However, this comes at a cost, which is more store closures and more Elder-Beerman layoffs by the retailer. The reason behind this is because fewer employees would be required to run a more digital company versus a company with a physical retail presence.
Presently, there are 260 stores in 24 states that are operated in the Bon-Ton ecosystem, which could feel the impact sooner rather than later. In a year’s time, it could be that the number of operated stores is much lower.
“Vienna’s Elder-Beerman store closing in January,” The Parkersburg News and Sentinel, November 29, 2017.
“The Bon-Ton Stores, Inc. Reports Third Quarter Fiscal 2017 Results,” Bon-Ton Stores Inc., November 16, 2017.