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American Retailers in Bankruptcy, Liquidation

Published 10/22/08 Craig Harrington - Print Article
E-mail - editor@economyincisis.org

Many retail chains in the United States have come under fire as the economy crumbled around them. As food and fuel costs drained disposable income, many companies have been forced to liquidate their assets and file for bankruptcy, according to The Los Angeles Times.

The liquidation and clearance sales of Mervyns, Linens’n Things, Shoe Pavilion, and other department stores offer great short-term bargains for shoppers, but come at the price of serious long-term decline. Mervyns, a store which has been in operation for 59 years, promises a massive going-out-of-business sale in hopes of capturing some of the holiday shopping season. By January 1, 2009 most of its employees will be out of work.

The collapse of these stores comes at the heels of other bankruptcies in the retail world. Sharper Image Corp., Wickes Furniture and Levitz Furniture closed earlier this year and most experts expect closings to continue into the future. With retail sales down and wages slipping, most department stores cannot afford to compete with big-box multinationals like Wal-Mart and Target.

Americans have been hit hard at the gas pump, in the super market, and in their regular paycheck. Coupled with the dramatic decline in the stock market, these factors have sapped the amount of money which could otherwise have been directed into retail and other areas. Retailers aren't the only ones being hit by the spending crunch, auto sales are down across the board for almost every make, model and manufacturer.

For an economy largely dependent on strong consumption, the prolonged slide has severely weakened many companies. Entire industries, like retail and automotive, have begun sinking with no clear end in sight. The government is still unsure as to how it will deal with the economic crisis; in fact the government is still unsure whether or not they are willing to use the term “recession” as if the reality of the situation has gone unnoticed by most Americans.

Source The Los Angeles Times

After 59 years in business, the Mervyns department-store chain called it quits Friday -- promising a huge going-out-of-business sale just in time for the holidays.

And there is plenty of competition for a close-out Christmas. Linens 'n Things Inc. began a liquidation sale Friday, and Shoe Pavilion Inc. starts one this weekend, according to firms that said they were hired to liquidate the stores.

…

As the economy's decline continues to batter Main Street, shopping centers and strip malls across the nation are becoming home to empty storefronts among the holiday decorations. On Wednesday, the government announced that retail sales had slumped the most in three years

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Article Comments From Readers

guest says "to big box" on 10/23/08
The problem is that the taxes leave the country, meaning we have to borrow. It is true that companies bought does not mean re-location. Outsourcing causes that problem. But as our money leaves, it comes back to us in the form of loans.

guest says "hey" on 10/23/08
just keep smile!!

guest says "Big Box" on 10/22/08
I've got no problem with the big box stores, most department stores have really terrible quality anyway... my problem is with the way the big boxes treat their workers (especially Walmart). I'm actually okay with our stores being filled with foreign goods.

Taiwanese t-shirts didn't destroy this country, but Japanese cars are working hard to achieve that end (not that they want to destroy us, if we went away who would buy their vehicles!?).

So long as the United States can produce and protect its high technology and heavy industries we'll be fine. We need a strong military (we are the only nation in the world with "lift capacity" and that pretty much trumps China's 150 million draft ready bodies) and we need manufacturing. We also need a strong financial sector to keep foreign money coming in to the country. Let them invest in our companies so long as the company is being run for the good fo the U.S. If free trade were abolished and capital markets were regulated this country would be a juggernaut.