Isn’t it obvious it would turn out this way?
On March 30, Gottschalks announced they were going to liquidate, extinguishing any hope the 105-year-old chain would continue to operate. We noted a few months ago that Gottschalks existed in a weird place–kind of a dowdy combo of Kohls and Macy’s, with mostly mall-based locations–and that their senior citizen-skewing product mix wasn’t likely to keep them afloat through their troubles. This all proved to be true, but another factor in their demise was some truly terrible bad luck: the store fleet for Fresno-based Gottschalks is concentrated most heavily in the areas most adversely impacted by the housing crisis of 2008. Central Valley cities like Modesto and Stockton have been struggling with year-over-year real estate declines upward of 50%, which is truly catastrophic for the families living there–try and imagine having your personal net worth decline by two or three hundred thousand dollars in just one year! I’m really not sure what I’d do in such a situation, but I can tell you one thing I probably wouldn’t do when faced with such a situation: go shopping at Gottschalks.
The double whammy for malls, of course, is that Gottschalks and Mervyn’s co-anchored many malls together. Some malls, such as Bakersfield’s East Hills Mall, didn’t even have another anchor aside from these two. This will spell doom for a great many of the centers lining California’s Central Valley, but also many other places throughout the west where both chains operated.
The other story we forgot to follow up on–whoopsie!–is the equally-unsurprising failure of New York-based Fortunoff department stores. Like Gottschalks, we liked these guys just because they felt like a relic from another era, but “relic” and profitability don’t tend to go in the same sentence. The 2008 acquisition of the chain by NRDC Equity Partners–who helmed a successful turnaround of Lord & Taylor even in a bad economic environment (though this is now faltering, I’ve heard) and who also recently acquired Canada’s Hudson Bay Company–seemed to give these guys some hope. But ultimately their product mix and store fleet was perhaps too strange to survive in the current retail landscape. Their mostly mall-based, large stores leaned heavily towards housewares and jewelry but without any specific niche. They had neither the hip cachet of newer, smaller competitors like Crate & Barrell or West Elm nor the well-established legacy of larger old line stores like Macy’s or bargain prices of Best Buy and Wal-Mart, plus three of the four of their remaining stores were located in second-tier malls; one of them is even completely dead. What is sad about the loss of Fortunoff is that it’s a quirky regional chain that still remains well-loved; their imminent disappearance reminds me of New England losses from the ’90s and early 2000s like Apex, Ann & Hope, or Lechmere.