If your favorite clothing store has gone bankrupt, it may find new life online according to The Wall Street Journal.
Selling apparel online can be less costly, as the pricing of fulfillment operations, technology systems, shipping and free returns is less per item than brick-and-mortar costs, and from companies like Onestop, which takes care of orders from a number of websites out of a warehouse in Compton, California, they make it easier for former brick-and-mortar retailers transitioning into online-only fashion labels.
However, a successful transition is a race against time, as a good example is the once popular brand, American Apparel, where it can fetch tens of millions of dollars in a bankruptcy auction, but its value quickly drops after stores close. New owners must rush to line up new designers and manufacturers, and set up distribution networks geared toward shipping to homes before shoppers move on.
With a majority of retailers on the decline, a number of firms specializing in transforming failed brick-and-mortar chains into online stores have emerged.
After a liquidation, “all that’s left is the brand name and the customer following,” Mr. Bhasin said. “If it takes 2.5 years to revive, the customer is gone.”
Behind the scenes, logistics experts must ensure that the brand can deliver like an e-commerce outfit. Arranging the fastest shipping methods and negotiating lower rates with shipping carriers is also key.
Canadian T-shirt wholesaler Gildan, which plans to relaunch American Apparel this summer, hired a few American Apparel marketers to keep the brand on “life support,” as Garry Bell, Gildan’s vice president of marketing and communications, put it. The company has already revived American Apparel’s wholesale business, lining up suppliers for a “Made in the USA” line and a less expensive one to be manufactured in South America.
Other failing mall chains are still fighting to stay alive, but the future doesn't look that promising. Abercrombie & Fitch tried to sell itself but those efforts recently stalled, leaving the apparel retailer to revive its business on its own. Additionally, True Religion launched a bankruptcy turnaround in July, but it plans to keep many stores up and running through the process.
Furthermore, companies that buy brands after liquidation often see moving online as a temporary resolution only.
“I don’t think that you can buy a brand today and just go strictly online,” said Jamie Salter, chief executive at Authentic Brands, which also owns lingerie seller Frederick’s of Hollywood. “When you can touch and feel the brand inside the stores, when you can see it, it gives it that heartbeat.”
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