Filene's Basement, the American retailer famed for its "Running of the Brides" wedding dress sales, and sibling retailer Syms, known for its tagline "an educated consumer is our best customer," are now facing the ultimate markdown: chapter 11 bankruptcy.
Syms was founded in 1958 by Sy Syms, while Filene's dates back to 1909, when Edward Filene opened his first store (in Boston) to sell overstock from his family's department store located upstairs. Syms bought Filene's Basement out of bankruptcy in 2009.
"This has been a challenging time for Syms and Filene's Basement," said CEO Marcy Syms, Sy's daughter, in a statement explaining why the board approved filing for Chapter 11 bankruptcy protection with plans to liquidate and close the famed stores in the new year. "We have been faced with increased competition from large department stores that now offer the same brands as our stores at similar discounts."
Sy Syms was a pioneer in selling name-brand goods at discount prices but also understood the underlying economics: “If you can't sell it, liquidate.”
Despite using the recession as a promotional platform, the namesake retail chain he founded reported a loss last year of $50.3 million on sales of $445.1 million. Now, its bankruptcy filing is timed to liquidate inventory during the holiday season and then sell off the real estate. With 25 Syms and 21 Filene's Basement stores, mostly located in the eastern United States, about 2,500 employees will lose their jobs as a result.
In a difficult economy, consumers are shopping at rival discounters like T.J.Maxx and Ross Dress for Less and online at flash sale websites, while larger department stores are carrying the same brands.
As the Wall Street Journal commented, “Discounting…has gone mainstream," adding that “Fast-fashion retailer Hennes & Mauritz AB's H&M stores sell jeans for $29.95, and competitor Inditex Group's Zara chain offers men's suits for less than $300. High-end department stores like Nordstrom Inc. and Macy's Inc.'s Bloomingdale's are stepping up openings of outlets.”
“Chain stores have been decimated by larger chain stores as medium-budget charm gets steamrolled in favor of big-scale efficiency operating on larger chunks of real estate,” wrote Michael Musto in the Village Voice.
In a ripple effect, owners of shopping-centers are already reeling from bankruptcy vacancies from retailers like Circuit City and Linens 'N' Things, as well as store closings by Gap and Best Buy.
Naturally, there's been an outpouring of grief by shocked customers on the Syms and Filene's Basement Facebook pages, on Twitter and across the blogosphere.