Yesterday’s WSJ had a neat article about the bankruptcy of cheap-chic clothing retailer Steve & Barry’s. It explores the practice of malls essentially paying S&B’s to open up shop in large, unoccupied spaces. This subsidy tied into the company’s business of “nothing above $9.98”. Sez the Journal:
For mall owners, large anchor spaces, which were once occupied almost exclusively by department stores, are especially important. Their role is to draw lots of shoppers into malls, enabling owners to rent their smaller spaces to specialty stores. When anchor spaces go dark, clauses in the leases of smaller tenants often permit them to pay lower rents.
This led the company to go from 31 stores in 2004 to 276 stores by this year. It looks like the company came to rely on the upfront payouts from mall owners, which fueled a rapid expansion in new stores, which fueled a greater need for more upfront payouts (esp. as the economy slowed and sales dropped), which fueled rapider expansion, which. . .
Well, you can guess what happened; the company went bankrupt a few weeks ago. The story’s a little more complicated, and also touches on the company’s celebrity-branding strategy, including its Sarah Jessica Parker line, “Bitten.”
I found the article pretty compelling, despite the fact that I’d never bought anything in one these stores. Still, I like to try to gain an understanding of how retail works, and sometimes fails to, while also trying to grok what the ebb and flow of different types of stores and product mixes says about us as consumers. For the moment, access to the article is free, so check it out.