As Forbes analysts once put it: “Retailers that have no business still being in business will go out of business.” And that’s the scenario we’re looking into in the later half of the year. Unfortunately, for many dying companies, it’s about time. 2023 is on track to be the worst year for retail bankruptcies since 2020. Many strip-mall mainstays are exiting the market right now as foot traffic continues to collapse in many cities. Major brands like Amazon and Target are already conducting the second or third round of store closings this year as they prepare to fight the downturn that is now unfolding all around us. Continued Below The Video
Several big-box stores that have been in trouble for a while are finally saying “so long” and completely disappearing from the US retail scene. For example, Buy Buy Baby is now saying its final goodbyes as parent company Bed Bath & Beyond concludes its bankruptcy liquidation process. The chain that sold products for infants and young children is now closing down all of its locations after debtors canceled an auction of the company’s entire business, including its online operations, after failing to secure a more attractive offer.
Buy Buy Baby’s stores, which Bed Bath & Beyond had purchased for $67 million in 2007, were seen as one of the retailers more valuable assets, and many industry watchers expected a buyer to save the chain. In a letter released by former Bed Bath & Beyond activist investor Ryan Cohen he said he believed Buybuy Baby was “much more valuable than the Bed Bath & Beyond ’s entire market capitalization.” Unfortunately, the two retailers are riding into the sunset together in 2023. According to Neil Saunders, the managing director at research firm GlobalData, “It was almost a matter of when, rather than if, these companies would go under.”
The pandemic bought many retailers a little more time. Consumers spent freely, flush with cash from stimulus checks, while retailers were also able to borrow money on the cheap. “Covid masked some of the weak players,” said Steve Dennis, founder of SageBerry Consulting. “It staved off the reckoning.” Now that the pandemic ended, it’s back to reality and retailers are confronting the problems of the past: too many stores, too much debt, and too few customers. Those who loaded up on debt are having a harder time making payments as they watch sales and profits deteriorate. “A lot of these companies were essentially zombie companies pre-Covid,” said Craig Ganz, an attorney at Ballard Spahr who has handled retail bankruptcies for several decades.
“They were primarily surviving on debt, and now the debt has become simply too expensive for them to afford.” For that reason, many brands are dying out so rapidly right now, and many more will face the same fate as we enter another difficult period for our economy. The spike in the number of bankruptcies comes at a time when Americans are cutting back on discretionary spending and directing more of their budgets to afford the rising gas, groceries, and other staple. Recession talks are intensifying in the past couple of months, and major companies are already conducting mass layoffs. A lot more could go wrong before the year is over. That’s why today, we decided to list some brands that are being destroyed in 2023.