New England clothing retailer Bob’s Stores is shutting its doors for good. The retailer filed for Chapter 11 bankruptcy in June and was unable to secure the necessary financing to keep its 21 brick-and-mortar locations open; all will be closed. Store merchandise, fixtures and other assets will be liquidated. The official date of closure was July 14, 2024.
While Bob’s has been a fixture in New England for 70 years, the company has struggled for the past 30. Bob’s was divested from CVS in 1997 and faced its first bankruptcy just six years later. TJX later acquired the company and then sold it to venture capital firms Crystal Capital and Versa Capital Management. Two more bankruptcies and a restructuring followed, but Bob’s continued to struggle financially until this most recent filing, which ended the company for good. So, what happened? Bob’s has clearly come back from the financial brink before, but wasn’t able to do so this time.
Bob’s story isn’t a unique one; this cautionary tale has been repeated multiple times over the past several years. Brick-and-mortar retail is struggling, and apparel and footwear stores are suffering more than most. Others have been forced to significantly reduce their number of locations or restructure to stay afloat.
That’s sad news for employees, customers and other stakeholders. However, we can take away some important lessons by understanding the trends that contributed to Bob’s downfall.
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1. Increased Competition
Over the past few years, small- and medium-sized fashion and footwear retailers have faced intense competition from all sides. They struggle to match the selection, low prices and speed of big box retailers. Additionally, they have had to contend with the growth of fast fashion and discount retailers like T.J.Maxx and Marshalls.
Mid-priced brands like Bob’s also struggle with competition from luxury retailers as well; they are often unable to provide the shopping experience or product quality needed to keep pace.
Takeaway: Differentiate through engagement. The best way to respond to competition is to focus on the customer. Develop a clear understanding of their tastes, values and interests, and then offer them a personalized shopping experience through high-quality customer service, unique product offerings, multi-channel engagement and community involvement.
2. The Move to Online Shopping
As a whole, brick-and-mortar has struggled as people have adopted online shopping. This is particularly true with clothing retailers as customers prefer the convenience of shopping for clothing online and take advantage of generous return policies. As a rule, large clothing retailers have done quite well at moving to online shopping. Some, like Walmart, have launched full-fledged online marketplaces, while many small retailers have launched as fully ecommerce brands.
Bob’s did have an online presence, but the company wasn’t able to grow it enough to be competitive. It’s notable that as of this writing, online shopping is not available and the brand’s website is listed as under construction. The company was not able to expand its online presence and maintain its brick-and-mortar stores.
Takeaway: Digital transformation is a worthwhile investment. The key to survival is to offer robust, personalized online shopping experiences. Building an online presence cannot be an afterthought. It requires time and investment.
3. External Economic Shifts
In the past several years, economic downturns have affected the viability of Bob’s and other retailers. When consumers have less money, they often reduce the amount of money they spend on clothing and footwear first. The company may also have struggled with supply chain issues, higher rents and increased operating costs — those things have certainly impacted other clothing retailers.
Takeaway: Have cost-reduction strategies ready. The worst time to come up with a cost-reduction strategy is after your business is facing an economic struggle. Instead, you should always be aware of opportunities to reduce your costs. Look ahead and consider what you would do if your revenues were reduced or your operating costs skyrocketed. Could you emphasize a new revenue stream, renegotiate credit terms or use technology to streamline operations?
4. Financial Mismanagement
While Bob’s closure may not be the result of financial mismanagement, this is often a factor when retailers are forced to close. This may come from carrying too much debt, failing to acknowledge and adapt to market changes or simply making bad financial decisions.
5. Shifting Customer Tastes
Customer preferences have changed over time, but Bob’s and similar retailers haven’t been able to make changes to keep up. They failed to offer personalized shopping options or engaging experiences. The result was that they often fell off of customers’ radars after being perceived as dated and out of touch.
Takeaway: Market research is never-ending. Brands that survive long-term keep their finger on the pulse of customer preferences. They pivot as needed to remain relevant and will adopt new channels of engagement as needed.
There is no use in sugarcoating things as this is a challenging time for medium-sized clothing retailers. Bob’s, a regional chain, stands as clear proof of that. That said, other, similar brands are not doomed to the same fate. Retailers can take steps to navigate inevitable changes in an evolving market. They can proactively adopt strategies that position them to deal with industry shifts. This includes controlling costs, developing new streams of revenue and auditing financial management practices.
Additionally, these brands must focus on relevance. They have to prioritize the customer experience and pivot as new trends emerge. Customer engagement must be a top priority so that they don’t lose the attention of their target market. Finally, any brand that hasn’t invested in digital transformation to build a strong online presence is unlikely to succeed in the future.
Maksym Prokhorov is a retail professional turned engineer who transitioned careers after a contractor failed to deliver a CRM system he needed. This frustration led him to create business automation platform PLATMA — born from his own struggles with coding — to ease the tech pain for everyone. He now leads the company as CEO and Co-founder. Since its inception in 2022, PLATMA has achieved a sustainable 20% month-over-month revenue growth, with annual recurring revenue reaching $1.5 million. The platform is projected to increase by 700% in the next six months.
