Did Startup Sites Help Push Syms And Filene's Basement Into Bankruptcy?

Discount department store Syms and its subsidiary Filene's Basement have filed for Chapter 11 Bankruptcy protection, according to petitions filed in Delaware yesterday. The retailer, which reportedly employs about 2,450 people, plans to close all 46 of its stores, located mostly in the eastern U.S. states.

So what role did the success of Gilt Groupe and other startup retail sites play in the downfall of these large retail institutions?

In a statement, CEO Marcy Syms noted that increased competition from other department stores that were offering the same brands at similar discounts, and a growing number of private discount retailers placed an increasing amount of pressure on the Syms and Filene's Basement stores. She also cited that there was less overstock merchandise to be purchased since the economic downturn, since companies were keeping a tighter inventory.

Michael Tesler, a partner at Retail Concepts in Norwell, Mass., said that the rise of flash sale sites like Gilt Groupe "have been generating a lot of excitement, energy and buying power in the off-price industry." Tesler notes that also within the last 10 years, "luxury retailers like Saks and Nordstrom have created their own 'basement' stores with the very same merchandise that Syms and Filene's Basement used to purchase from them at the end of a season. That merchandise is what made Syms and Filene's Basement unique, but they didn't have that anymore."

Tesler, a former merchandising executive with Filene's and Filene's Basement, says another factor in the downfall was that "they [Syms] were using the same system that the store was founded on in 1959. They made no updates and were completely rooted in the past."

This is the third round of bankruptcy filings for Filene's, as Secaucus, N.J.-based Syms acquired the retailer out of bankruptcy in the spring of 2009 for $62.4 million, in an attempt to save the struggling chain. Syms offered deep discounts of surplus goods, while Filene's Basement, founded in 1909 by William Filene, had become famous for its "Running of the Brides" event, in which hundreds of customers would line up to purchase deeply discounted bridal gowns.

Both stores will run a liquidation process through January 2012, after which a schedule of store closings will be established.

Comments

[CouponSal]

03:45 AM on 12/04/2011

As a New Jersey resident, I have seen the “an educated consumer is our best customer” ad on public television for decades; remember when Marcy Syms inherited her position (her dad had been CEO before her). I had missed the buyout of Filene’s by Syms; I wonder if that was too big a purchase? Sad to see both of these longtime East Coast discount staples close. The end of an era, in a way. The garment industry is certainly cutthroat; always has been.

[wd d23]

04:44 PM on 11/05/2011

so much from the unemployment rate

laughing

[CouponSal]

03:47 AM on 12/04/2011

We knew that publicized number was reduced by seasonal temporary jobs, anyway, along with the long-tem employed giving up, or being unable to collect benefits any longer. The government numbers are always slanted toward optimism, anyway.

[billa518]

12:03 PM on 11/05/2011

To answer the title question: No. Startups didn't kill them. Trying to export the trademark NYC arrogance and rudeness to the Midwest killed them.

[lukedude27]

10:13 PM on 11/04/2011

Giving all those bridezillas cheap wedding dresses probabally did'nt help either. I am so glad I am a guy. Go to the tux shop rent it for $120 and your done.

[CouponSal]

03:42 AM on 12/04/2011

I always thought brides should be able to rent dresses, too, but apparently most women are not interested in that—at least that is what the research seems to say.

[verycold]

09:00 PM on 11/04/2011

This company has had a lot of trouble for years. It is no surprise to me. I worked years ago for a buyer in a large city. It is really a tough business. Bruising. Lots of egos get crushed. I confess I loved the industry, but failures came quick and often.

[wildbill654]

06:52 PM on 11/04/2011

This is just another retailer that failed due to changing economic condtions and a store operating policy that was antiquated.
They have a lot of company.

Review what is here:

Without government intervention failures would include: GM,Chrysler, AIG, numerous large banks and that would be added to what has already failed. All of which is either directly, or indirectly - policy related. Voodoo economics will do it every time.

[me3jewels]

06:43 PM on 11/04/2011

Didn't you ever hear the story about the successful corner gas station? The guy made so much money that another opened on the opposite corner. They both made a ton of money. Then a 3rd and 4th opened on the other two corners and they all went broke.

[EdMercer]

05:17 PM on 11/04/2011

Too bad to see http://www.bestbankruptcysite.com stores that have been around for so long failing.