Retail is a tough business. It’s extremely seasonal and vulnerable to market fluctuations and consumer trends. As a result, we can all think of countless retailers where we once used to shop that are now closed.
Deck the Halls With the Malls
Have you been to the mall lately? Have you ever noticed how a boarded up shop is cleverly disguised using paint and advertising posters?
Small, mall-based retailers have suffered the most in recent years. Reports indicate that in all but the highest-end shopping malls, there has been a significant decrease in the amount of shoppers.
Oftentimes these businesses live or die based on their performance around the holidays. Many retail operations are designed to prosper with only one month of profitability; that being the time between Thanksgiving and Christmas. If they fail to make a profit that month, then they fail to make a profit for the entire year.
And that brings us to retail bankruptcy day.
Happy Bankruptcy Day!
The first business bills that come due after the Christmas holidays are typically on January 10th (or January 12 this year thanks to the weekend). If a retail business had a tough year and an especially tough Christmas season, they typically file for bankruptcy right before their January bills are due.
Is there a retailer that you really love? Do they seem a little less busy this year than usual? If so, dont be surprised if they file bankruptcy this week.
The Eleventh Chapter Is Best
Most retailers in this position will file for chapter 11 bankruptcy. The good news is that chapter 11 does not equal certain death for business. Often, only a few store locations have to close, and sometimes a business will survive chapter 11 bankruptcy without closing even a single store. But there is also a chance that when a business files for chapter 11, the entire operation will be gone for good.