Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche

The Death Spiral

Two more Retailers Die

If Jeff Bezos were a fighter pilot, he would be painting the logos of dead retailers on the side of his plane. Jeff’s creation, Amazon (NASDAQ: AMZN) racked up two more “kills” in April, and nobody seems to have noticed.

As usual Amazon’s victims were specialty retailers. The first was sewing and crafts chain Hancock Fabrics; which declared bankruptcy in February. All of Hancock’s 255 stores were sold to retail vulture Great American Group in a bankruptcy auction, The Consumerist reported.

Great American; a liquidator, plans to sell off the furnishings and contents of Hancock’s stores for whatever it can get. Sadly enough, Amazon could profit form this because some of the liquidated merchandise will undoubtedly find its way to the Everything Store.

Amazon hurt Hancock by becoming the go to place for crafts and sewing supplies. Part of the problem is that crafty people can order all their supplies online, so they spend more time sewing or crafting rather than shopping. Another problem is that most crafters know they can usually get the suppliers cheaper online.


Sport Chalet is Dead

Vestis Retail Group; which operates 56 sporting-goods stores under the brand names Eastern Mountain Sports, Sport Chalet and Bob’s Sports, is also shutting down completely.

Vestis’s CEO Mark Walsh, specifically blamed online shopping for the chain’s demise in a Chapter 11 petition, Bloomberg reported. Online retailers hurt sporting goods stores by selling clothes and shoes at lower prices with free delivery. Another problem is that sporting goods stores; like craft stores, cater to middle class consumers who are the most likely to shop online.

“The continuing shift in consumer behavior; away from traditional brick-and-mortar retailers and toward online-only stores, together with increased competition from big-box and specialty sporting goods retailers, have contributed to an industrywide weakness,” Walsh admitted.

All 46 Sport Chalets and 10 other locations will shut down as a result of the closure, Bloomberg reported. Two other sporting goods retailers; Pacific Sunwear of California and Denver-based Sports Authority, declared bankruptcy in recent months.

Vestis employed 4,000 people, but it entered the death spiral after being unable to compete. Bloomberg reported that Vestis owed around $500 million to creditors but had only around $50,000 in assets. Vestis was owned by Versa Capital Management, a private equity outfit.

Bloomberg tried to blame big-box stores for Vestis’s demise but its chains had competed successfully with those outlets for years. It looks as if online retail in general; and Amazon in particular, are the real cause of this demise.

One has to wonder which retailer Amazon will shoot down next. It looks as if no specialty retailer is safe, as long as Amazon is prowling the skies.

The retail apocalypse is heating up, raising the question: which retailer will die next? I also have to wonder when some politician like Donald Trump will notice all the job losses and go on the warpath against Amazon.