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FAILURE Fashion Retailer Bebe Closing All Stores.

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TheDillon__

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2017 has seen the death of three major fashion retailers so far.

American Apparel and Wet Seal announced earlier this year the cessation of all business, both in physical retail locations and online.

Now, fashion retailer Bebe, after 40 years in business, will be shutting the doors on all of their 312 nationwide locations this year to put all of their focus on the growth and expansion of their website.

Who else do you think will eat the dust of the Retail Depression this year?

Why are so many retail shops down for the season?

What does this spell for those who are looking at starting their own fashion spaces online?

Source: 1 2 3
 

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Who else do you think will eat the dust of the Retail Depression this year?
Owners of large malls.

Yes, women love to shop, but if BEBE can't survive in a damn mall, I don't think no one can.

Amazon and convenient online ordering are killing all of these places.

I think the last time I walked into a clothing store at a mall George W. Bush was in the presidency.
 

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Amazon and convenient online ordering are killing all of these places
Discount clearance outlets as well. I took my daughter shopping last weekend and couldn't believe the prices that these places were charging. I'm a golfer and if I wanted to buy an outfit consisting of shoes, pants/shorts and a collared shirt, my bill would have been close to $400; For 1 outfit!! I found a warehouse clearance outlet and bought the same name brand stuff for less than $100 ($40 shoes, $20 shirt and $30 pants).
 

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Sears/K-Mart will probably be closing soon. The store near me actually rented out half of the store to WholeFoods and had it remodeled because Sears couldn't pay their rent for their giant store anymore. I think anything not grocery related needs to really re-consider their strategy.

B&M stores have not evolved at all, inventory is out of stock, long lines, short staffed, etc.
Companies don't offer the 'buy online and pick up in store' options anymore. Bed, Bath & Beyond wouldn't let me buy my mixing bowls for a bridal shower online and pick them up at the store. I had to drive to the store, pay for them there, and then call customer service so my mixing bowls showed up as 'Bought' on the registry. WTF

Same bridal shower, didn't have time to go to the store so I bought a dress on Amazon. $35 for a dress that probably would have been close to $95 at a store.

It isn't only clothes- I buy things for my grandpa all the time (batteries, lightbulbs, shirts) off of Amazon and have them delivered to his house. I only live 10 minutes away but I hate going to Wal-Mart and standing in line.
 
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TheDillon__

TheDillon__

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There's still one distinct advantage to in-store shopping that online is dying to replicate - being able to actually try the clothes on!

No one wants to deal with the hassle of a shitty return policy, having to send something back because of a bad fit, or a color looking differently online than in person.

What solutions/workarounds to this have you seen so far? What do you foresee the future of physical retail being? What caused this depression to begin with?
 

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2017 has seen the death of three major fashion retailers so far.

American Apparel and Wet Seal announced earlier this year the cessation of all business, both in physical retail locations and online.

Now, fashion retailer Bebe, after 40 years in business, will be shutting the doors on all of their 312 nationwide locations this year to put all of their focus on the growth and expansion of their website.

Who else do you think will eat the dust of the Retail Depression this year?

Why are so many retail shops down for the season?

What does this spell for those who are looking at starting their own fashion spaces online?

Source: 1 2 3
Less than 10% of retail sales are accounted for online! The last recordable number was just over 6%. So if 90+% is brick and mortar why go with online? Stores are going under because they leveraged too much with OPM - Other Peoples Money - specifically easy credit. Consumers are moving away from the big chains toward smaller niche businesses (good for us). Not many businesses are making money online. It often costs more to get a customer than you make. If there was money to be made wouldn't Amazon be leading the way? They finally turned a profit in 2016 but it wasn't from their retail sales. It was mostly from their services such as cloud computing.
 

mindfulimmortal

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Less than 10% of retail sales are accounted for online! The last recordable number was just over 6%. So if 90+% is brick and mortar why go with online? Stores are going under because they leveraged too much with OPM - Other Peoples Money - specifically easy credit. Consumers are moving away from the big chains toward smaller niche businesses (good for us). Not many businesses are making money online. It often costs more to get a customer than you make. If there was money to be made wouldn't Amazon be leading the way? They finally turned a profit in 2016 but it wasn't from their retail sales. It was mostly from their services such as cloud computing.
I just checked again and the last quarter of 2016 shows only 8.3% of retail sales are from online - so almost 92% is brick and mortar. Amazon is opening physical stores. The source is:
US E-Commerce Sales as Percent of Retail Sales
 

Dark Water

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Not only is Bebe closing stores, but if they cannot negotiate enough of their leases with current landlords, they may have to file Chapter 11 bankruptcy.

I'll play the opposite here and say I don't think B&M fashion and clothing stores are going anywhere anytime soon. I have a clothing outlet near me with ~170 retailers and it has been expanded 3 times in the last 20 years.

It just goes to show how hyper competitive clothing and fashion is especially in the B&M space. You are literally competing with the best in the world on unlimited budgets who have access to data comprising millions of purchases and using analytics based on that to formulate everything from store layout, designs, R&D, supply chains, etc. Even if you are a mega brand like Bebe, if you don't have multiple competitive advantages behind the scenes I don't think its feasible you can compete in this space for long.

I did a case study on the fashion giant Zara back in college. They can develop & design a new product and bring it to stores within 2 weeks, whereas the industry average is 6 months. And they launch 10,000 new products per year. That means they can stay way ahead of the curve on trends. And they created their own highly automated factories in Spain and Portugal, so they don't have to waste time with shipping or Asian manufacturers. This is but a very small example of what a company is doing to kill the competition.

How the hell do you compete with that?

Bebe might seem like a giant to you, closing down. But they are eclipsed, and have been crowded out, by the true players. Bebe has annual revenues of around ~$600 million. Compare that to Zara, at ~$15 BILLION (2016) or someone else like Ralph Lauren at $7.4 billion.

The B&M fashion industry is a game being played by the world's biggest players - so my guess is, somewhere along the line, Bebe misstepped, in either not staying ahead of the curve, developing and creating their own supply chain, or losing out on fashion trends due to not following analytics. And they are paying the price.

A guppie has been eaten by the sharks, while the rest of the B&M industry remains unshaken. The big bad wolf is not blowing down a brick building anytime soon.
 

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Target by end of 2020. Their strategy is now to beat WalMart at it's own game. They will fail.
I dunno man. Every middle-class white woman I know makes the weekly hajj to Target.


Then again, every Target I go to has 30 checkout stalls, but only 2 checkers.


I could see it going either way.
 

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There's still one distinct advantage to in-store shopping that online is dying to replicate - being able to actually try the clothes on!

No one wants to deal with the hassle of a shitty return policy, having to send something back because of a bad fit, or a color looking differently online than in person.

What solutions/workarounds to this have you seen so far? What do you foresee the future of physical retail being? What caused this depression to begin with?

I don't see this as a big enough reason to shop in person, except for last minute needs.

I see online shops adapting to where easy returns are the norm.
  • Included peel and stick, pre-paid return labels included in every box.
  • A strip of packing tape to help you re-seal the original shipping box.
  • Automatically have a USPS pick-up scheduled when you request to return.
  • Sending out multiple sizes, and having you return the ones you don't like. Only charging you for the extra sizes if you don't return them.

When you buy glasses online at Warby Parker, they send you 5 frames at a time to try on for free.
 

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Target by end of 2020. Their strategy is now to beat WalMart at it's own game. They will fail.
Don't you dare take Target away from me!!
 

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Not many businesses are making money online. It often costs more to get a customer than you make. If there was money to be made wouldn't Amazon be leading the way? They finally turned a profit in 2016 but it wasn't from their retail sales.

Amazon purposely has reinvested all profit into growth of the business. That's why they are the behemoth they are. There are lots of articles out there about this.


Not many businesses are making money online. It often costs more to get a customer than you make.
Higher customer acquisition costs. Much lower overhead.


I just checked again and the last quarter of 2016 shows only 8.3% of retail sales are from online - so almost 92% is brick and mortar. Amazon is opening physical stores. The source is:
US E-Commerce Sales as Percent of Retail Sales
That chart you shared shows ecommerce percentage of retail sales doubling every 6 years. 8.3% doesn't sound like a lot... but look at the trends. There isn't one Quarter in the last 12 years where this percentage dropped. The writing is on the wall.
 

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But on the other hand Amazon is opening retail locations for their books. One is opening up about 20 min from me. I'll be sure to check it out once it opens.


First N.J. Amazon store set to open in North Jersey mall

Don't get me wrong, traditional retail is dying but I think a new version is on the rise that will provide a new experience.

I was walking through Bloomingdales the other day and looked around at all the inventory they had and just thought to myself: "That is so much shit that will never move." Not a living soul was found on that floor.
 

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I dunno man. Every middle-class white woman I know makes the weekly hajj to Target.


Then again, every Target I go to has 30 checkout stalls, but only 2 checkers.


I could see it going either way.
It definitely could still go either way, but I know they're making their buyers do sku rationalization internally, and they're taking a top volume sku approach. I think if they really go for that strategy, they're going to undermine the quality of their own brand. If they do that, they're done.
 

becks22

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I dunno man. Every middle-class white woman I know makes the weekly hajj to Target.

Then again, every Target I go to has 30 checkout stalls, but only 2 checkers.

I could see it going either way.

As a middle-class white woman, I concur. Target is not only clothing. I buy shampoo, makeup, shoes, groceries, etc. there. Also I remember reading something about women making 60% of all household purchases (I think I read it here somewhere) so Target has tried to appeal to women to make it easy for them to get all their household crap in one place and for them to have the option to buy clothing at the same time.
 

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As a middle-class white woman, I concur. Target is not only clothing. I buy shampoo, makeup, shoes, groceries, etc. there. Also I remember reading something about women making 60% of all household purchases (I think I read it here somewhere) so Target has tried to appeal to women to make it easy for them to get all their household crap in one place and for them to have the option to buy clothing at the same time.
The question is: will you still shop there when the product mix is exactly like Walmart but more expensive. They have an embattled CEO, and I think he's going to bring down the quality of their product mix. Just one mans theory.
 

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The question is: will you still shop there when the product mix is exactly like Walmart but more expensive. They have an embattled CEO, and I think he's going to bring down the quality of their product mix. Just one mans theory.
As a middle class white nan who's married to a middle class white woman...

IMG_6358.JPG

I mostly go to target because I hate going to Walmart. Target has done so well recently because they're the antithesis to Walmart.

Mods, remove picture if too disturbing
 

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As a middle class white nan who's married to a middle class white woman...

View attachment 14457

I mostly go to target because I hate going to Walmart. Target has done so well recently because they're the antithesis to Walmart.

Mods, remove picture if too disturbing
I agree with you. What I'm saying is that with their present strategy I think you'll see the inside of a target look more and more like the inside of a Walmart.
 

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I can't remember if I posted this or just told someone this story.

I went to Sears in December... I know I know... I actually did. This was because it was the closest store by 5 miles. Went to buy a fishing pole, went to pay with my credit card and my friend said let's pay with cash. I jokingly said, are you embarrassed to let your credit card company know you shopped at Sears? I was slightly embarrassed to be in a Sears. Almost made a Facebook post about it.

The store was practically empty in both customers and inventory AND more expensive than Target and Walmart. Sears is like the last resort emergency go to place if there isn't a Walmart, Target or Home Depot around.

During normal hours I shop at Target if I need something like toilet paper, shampoo, etc...

If it's past 10pm, there is a 24 hour Walmart by my house and I usually shop there only late at night so it's almost empty.
 

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Amazon purposely has reinvested all profit into growth of the business. That's why they are the behemoth they are. There are lots of articles out there about this.




Higher customer acquisition costs. Much lower overhead.




That chart you shared shows ecommerce percentage of retail sales doubling every 6 years. 8.3% doesn't sound like a lot... but look at the trends. There isn't one Quarter in the last 12 years where this percentage dropped. The writing is on the wall.
Yes but the problem is in cost of the last mile. Unless you have a digital product of course. Amazon had to ditch UPS for the most part and go to Uber like private delivery to get their costs down.
No doubt that there is a strong trend to online retail but it still is very small and will likely be less than 20% 5years from now. The internet is good to use like a catalog or to supply information (blogs, forums like TFF, logistics, research, etc.) but not many businesses are making a sustainable profit from pure internet. Most who are making money online are using the internet like MJ did (global search and lead generation). I guess I like to use the 80/20 rule to help me focus on results. If 80% of customers are not through online retail I don't want to put too much effort going that direction unless it is a tool (blog, forum, logistics, research, search, lead generation) that enhances my product or service. If there are outlier business stories that counter this thinking I would love to hear about them.
 

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Yes but the problem is in cost of the last mile. Unless you have a digital product of course. Amazon had to ditch UPS for the most part and go to Uber like private delivery to get their costs down.
No doubt that there is a strong trend to online retail but it still is very small and will likely be less than 20% 5years from now. The internet is good to use like a catalog or to supply information (blogs, forums like TFF, logistics, research, etc.) but not many businesses are making a sustainable profit from pure internet. Most who are making money online are using the internet like MJ did (global search and lead generation). I guess I like to use the 80/20 rule to help me focus on results. If 80% of customers are not through online retail I don't want to put too much effort going that direction unless it is a tool (blog, forum, logistics, research, search, lead generation) that enhances my product or service. If there are outlier business stories that counter this thinking I would love to hear about them.
I actually am not sure how to respond to this, but I know I want to. If I'm reading right, you're suggesting you think pure internet businesses are mostly not turning a profit?
Am I misreading you completely? Are you only talking about internet retail, or all "businesses [trying to make] a sustainable profit from the internet?"

Are you saying that you think many people/companies don't make money from the internet?
If that is what you're saying I just have to ask: have you led, or run a business yourself in the last 15 years?

Side question, do you think it's bad if Amazon ditches UPS for a delivery partnership with Uber? Why is that bad? Because it's new and different? Because it's not how delivery is "usually" done? I don't get why you highlighted that as if it were some kind of downside.
 

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I actually am not sure how to respond to this, but I know I want to. If I'm reading right, you're suggesting you think pure internet businesses are mostly not turning a profit?
Am I misreading you completely? Are you only talking about internet retail, or all "businesses [trying to make] a sustainable profit from the internet?"

Are you saying that you think many people/companies don't make money from the internet?
If that is what you're saying I just have to ask: have you led, or run a business yourself in the last 15 years?

Side question, do you think it's bad if Amazon ditches UPS for a delivery partnership with Uber? Why is that bad? Because it's new and different? Because it's not how delivery is "usually" done? I don't get why you highlighted that as if it were some kind of downside.
Young Gun you are correct in that "many people/companies don't make money from the internet". Like the gold rush many profited not from finding gold but from selling the tools and travel to the gold rush sites. A lot of business make money from the internet such as copy writers, web developers/coders, hosting, etc but not from direct sales. I say that from working closely with a wealthy businessman in the Las Vegas area who funded many startups as well as an import/export business. Everyone thinks internet businesses are making a lot of money but when you start looking at details you find they are not. I am sure there are some outliers to this but by and large not a lot of people are making a sustainable living/business from the internet.
My point wasn't that Amazon using Uber drivers for the last mile delivery was bad just that if you have an internet business that delivers physical products there is a high customer acquisition cost and high cost for the last mile delivery. In other words I am pointing out to consider total cost to include getting the product to the customer.
 

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I don't think we can mix all the products in the same line of reasoning.
Grocery stores are quite different from fashion stores.
For fashion stores, women prefer brick and mortar more than men, they "experience" a gown, they need to touch it, to feel how it fits on them....but they follow the trend; that's why some fashion stores, even big chains, close. They lack in creativity, they don't give women what women are looking for.
 

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Less than 10% of retail sales are accounted for online! The last recordable number was just over 6%. So if 90+% is brick and mortar why go with online? Stores are going under because they leveraged too much with OPM - Other Peoples Money - specifically easy credit. Consumers are moving away from the big chains toward smaller niche businesses (good for us). Not many businesses are making money online. It often costs more to get a customer than you make. If there was money to be made wouldn't Amazon be leading the way? They finally turned a profit in 2016 but it wasn't from their retail sales. It was mostly from their services such as cloud computing.
100% correct, I was going to write something similar.

The problem is not retail but the experience of retail. Consumers are basically changing their tastes into wanting more of a "holistic" experience. Sounds like bullshit but they don't want production-line retail anymore -- they want authentic and genuine people who are actually passionate about a specific thing. At least that's my view. They've become more gentrified.

One thing I would add is one of the main reasons B&M business is hard is because of all the shit you have to pay just to open the door. Business rates, staff, inventory, insurance, payment processing, etc. Whilst the "Internet" is appealing with its almost zero barrier to entry, you have to appreciate that nothing will replace the tactile indulgence of a store.

I actually am not sure how to respond to this, but I know I want to. If I'm reading right, you're suggesting you think pure internet businesses are mostly not turning a profit?
Am I misreading you completely? Are you only talking about internet retail, or all "businesses [trying to make] a sustainable profit from the internet?"

Are you saying that you think many people/companies don't make money from the internet?
If that is what you're saying I just have to ask: have you led, or run a business yourself in the last 15 years?

Side question, do you think it's bad if Amazon ditches UPS for a delivery partnership with Uber? Why is that bad? Because it's new and different? Because it's not how delivery is "usually" done? I don't get why you highlighted that as if it were some kind of downside.
The Internet is notoriously difficult to make money from on its own.

People buy products online, they don't buy the Internet itself. The level of service / content they expect from the net is huge. In the end, it's a decentralized medium with global reach, that's all. It's not the golden goose many people were duped into thinking in the late 90's. In other words, you still need real world assets / expertise / leverage / network to make it work.

Probably the best quote I found which sums it up... "If you're not paying for the product, you're the product".
 
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