The Chicago Tribune reports that the venerable retail chain Carson Pirie Scott, long a fixture in Chicago, will close its doors:
Carson’s will shut down its department stores by late summer after more than 160 years in operation.
After parent company Bon-Ton Stores failed to find a bidder willing to keep the business going, a bankruptcy judge on Wednesday approved the sale of the company’s assets, including Carson’s and other retail chains, to a joint venture of two liquidation firms and a group of company bondholders.
The flagship of Carson Pirie Scott was once among a full lineup of showy department stores — including Marshall Field’s, Sears, Montgomery Ward, Henry C. Lytton & Co. and Wieboldt Stores — that called Chicago’s State Street home. None of those names can be found there today.
Carson’s was started in Peru, Illinois before the Civil War. It was acquired by Milwaukee-based Bon-Ton in 2006. As noted above it joins a long list of Chicago retail stalwarts in going under. I haven’t been in a Carson’s store in decades. I’m not their target customer. Indeed, I’ve never been able to figure out just who their target customer is.
Don’t blame Carson’s demise on Amazon. Online still only constitutes 8% of retail. Retail is enormously overbuilt in the United States and it’s been increasing at an unsustainable rate
out of proportion with the increases in population or income.
But retail’s real problem is large retail chains built through leveraged buyouts:
The reason isn’t as simple as Amazon.com Inc. taking market share or twenty-somethings spending more on experiences than things. The root cause is that many of these long-standing chains are overloaded with debt—often from leveraged buyouts led by private equity firms. There are billions in borrowings on the balance sheets of troubled retailers, and sustaining that load is only going to become harder—even for healthy chains.
The debt coming due, along with America’s over-stored suburbs and the continued gains of online shopping, has all the makings of a disaster. The spillover will likely flow far and wide across the U.S. economy. There will be displaced low-income workers, shrinking local tax bases and investor losses on stocks, bonds and real estate. If today is considered a retail apocalypse, then what’s coming next could truly be scary.
Those LBOs have saddled retailers with too much debt and for the last decade they’ve been chasing their next interest payment. Bon-Ton just reached the end of the road.
“Retailpocalypse” began a year or so ago and in 2018 it’s accelerating if anything. Rural counties, particularly in the West and South, where retailers are major employers, are likely to be hard-hit.
“But retail’s real problem is large retail chains built through leveraged buyouts…”
No. They were LBO’d because they suck. Firms believed they could rejuvenate them, but not on an unleveraged basis for the perceived return on equity. A similar model exists for rejuvenating tired product brands.
That the calculus was wrong is a separate issue. I don’t follow, and we don’t do retail. Perhaps some of these have worked. Obviously some didn’t. But its not the debt, per se. They were dead men walking long ago. As you noted, just what was the purpose of Carson anyway?
When I was working at a law firm during summer break, I remember serving legal papers on the Carson’s in Peoria. I found a picture of it here on an interesting website dedicated to the history of the department store:
http://www.thedepartmentstoremuseum.org/2011/11/carson-pirie-scott-co-peoria-illinois.html
This would have been around 1990, and I don’t think I’d ever been in a store like it, several stories of chaos. I was used to malls. I had never served process before and wasn’t sure what to do, and was told to be evasive about what I was there for. I remember asking for the offices and being directed up flights of iron spiral stairs to labyrinthine hallways that more resembled utility access corridors than everyday functional space. I wondered if at the end of it all I would open a door and find myself outside.
Somewhere around this time Carson’s had been acquired by Bergner’s, a department chain based in Peoria. It seems like at one time every town had one or more such stores, and living memory is just the consolidation of many to the few. And somewhere along the line of expanding, they become less differentiated.
This page relating to the State Street store in Chicago might be of more interest:
http://www.thedepartmentstoremuseum.org/2010/05/carson-pirie-scott-co.html
Just looking through the floor directory is transportive.
Over the last year, my small rural Ohio town has lost its KMart, JC Penney and Sears catalog store. All had been in business for around 90 years.
Our main employer, Siemens, which had a substantial oil/gas field equipment business going back over 100 years, has also closed. The city is basically shutting down because nowadays it is off the beaten track. As recently as 50 years ago it was on the main north-south route for highways and railways, but the interstates killed it.