3 big reasons retail brands die in America

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The retail graveyard is littered with headstones of one-time favorite places to shop.

Who didn’t enjoy buying AA batteries for a new Sony Walkman in the late 1980s at RadioShack?

RadioShack effectively died in 2015 after years of irrelevance. Blockbuster was a great place to rent a $5 movie for a stay-at-home date night. Then came ‘Netflix and chill’ and the death of Blockbuster in 2010.
Sears was Amazon before there was Amazon. But today, the U.S. is full of vacant Sears stores after its 2018 bankruptcy at the hands of the modern-day Amazon.

And now a new crop of former heavyweight retailers are about to be wheeled into the graveyard after the coronavirus pandemic shuttered stores nationwide for months. In doing so, the flawed businesses of once iconic retailers J.Crew, Neiman Marcus, J.C. Penney, and Lord & Taylor have been exposed via high profile bankruptcy filings.

Here's a look at the retail graveyard. (Graphic: David Foster/Yahoo Finance)
Here’s a look at the retail graveyard. (Graphic: David Foster/Yahoo Finance)

More busts are inevitable, according to analysts.

“I think that there probably are more bankruptcies,” veteran retail analyst Simeon Siegel of BMO Capital Markets told Yahoo Finance.

All of the ailing aforementioned household name retailers over the past 20 years raise these questions: Why do retail brands die in the first place? Why do icons of our childhood one day go from being on top of the retail world to being buried 6 feet under and relegated — to an — in memoriam Wikipedia page?

Yahoo Finance looks at three reasons why.

No. 1: Horrific management

Having great management in retail is essential to consistently winning. And no one in retail exemplified horrific management better than hedge fund manager Edward S. Lampert, better known in many Wall Street circles simply as ‘Eddie.’

Lampert merged Sears and Kmart in an $11 billion deal in 2004. He stuck himself atop the merged company as CEO despite having no true retail management experience. Lampert closed Sears and Kmart stores across the United States in a failed bid to boost profits and pad his own big fat wallet.

This article was originally posted on finance.yahoo.com/news/.
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