GARDEN GROVE — The store-closing signs that promised 70% off women's apparel at the Fashion Bug store in the Garden Grove Promenade drew Margie Erickson in for a look around.
But Erickson ended her quick visit by doing what shoppers increasingly have been doing at junior women's apparel stores: She walked out without making a purchase.
"It's a nice store and everything, but they just don't have anything for me," said Erickson, 57, a longtime Garden Grove resident. "I think there are just too many of these [junior women's] stores and not enough younger shoppers to go around."
Judging from the ongoing wave of store closings washing through the bitterly competitive specialty retailing industry, Erickson is right. More than 2,000 store closings have been announced in recent weeks by nearly half a dozen chains, including Anaheim-based Clothestime Inc., which sells women's apparel, and Charming Shoppes Inc., which operates the Fashion Bug stores.
A growing number of retailers, including Clothestime, have taken the unusual step of filing for bankruptcy during the all-important holiday season.
"The interesting thing is that you're seeing a rash of [retail] bankruptcies before the Christmas shopping season ends," said said Ira Kalish, a retail industry expert with Management Horizons, a Los Angeles-based consulting firm.
Typically, Kalish said, troubled chains postpone bankruptcy filings and store closings until February or March so they can squeeze every drop of revenue from holiday shoppers.
But increasingly nervous lenders and vendors are quicker to pull credit lines on struggling chains. In recent weeks, several retail chain operators, including Edison Brothers Stores Inc. of St. Louis, Petrie Retail Inc. of Secaucus, N.J., and Sycamore Stores Inc. of Indianapolis have joined Clothestime in bankruptcy court. Most of the chains have announced plans to close stores, including some in California, and hold related store-closing sales.
Rumors continue to swirl that other retailers also will be forced into bankruptcy--and at the top of the list is Kmart.
Industry analysts say relatively healthy companies, not just bankrupt chains, also will be closing under-performing stores to cut costs.
Charming Shoppes, for example, will close 290 stores, including the Fashion Bug in Garden Grove, by Jan. 31, eliminating 2,500 jobs. Executives say the majority of the Bensalem, Pa., chain's 1,423 stores are healthy, but that they can't carry underperforming locations given new competitive realities.
The closings and bankruptcies are part of an ongoing wave of changes that is reshaping the entire retail industry. Big retailers such as Sears, Roebuck & Co. and JC Penney are using low prices and familiar name brands to lure customers away from smaller chains such as Clothestime and Fashion Bug. And, as Erickson noted, there's a glut of stores offering the same items.
Retailers say the bankruptcy filings will put further stress on their industry by spawning a series of store-closing and going-out-of-business sales that will flood the already saturated market with more deeply discounted merchandise.
Hardest hit have been chains such as Clothestime, which prospered during the 1980s by selling relatively inexpensive private-label clothing to young women. The retailer has struggled for the past two years, losing $18 million as its customers flocked to major discounters that offer familiar names at relatively inexpensive prices.
The big discounters, including Wal-Mart, "are simply undercutting Clothestime on price," said Kurt Barnard, publisher of New York-based Barnard's Weekly Marketing Report. "You have to wonder how long they can last."
Natalie Gibson, a Rancho Santa Margarita resident who shopped last week at one of Clothestime's two stores in Tustin Marketplace, said that the chain no longer stands out in the crowded junior women's market. "Almost all of the chains carry the exact same things," said Gibson.
Clothestime, which had grown quickly to more than 500 locations in recent years, now plans to close 137 stores, including five Clothestime stores and four Lingerie Time locations in Orange County. Last Friday, U.S. Bankruptcy Court Judge John J. Wilson approved the company's plan to close the stores.
The closing plans will feature hefty price discounts in merchandise as chains scramble to unload costly inventories. At Chess King, a men's store in Buena Park Mall run by now-bankrupt Edison Brothers, signs in the window shout out, "Everything must go." At Lingerie Time's Tustin Market Place location, the "entire store" is up for sale.
Clothestime will use deep discounts to sell $18 million worth of merchandise during a sale slated to run through Jan. 31. Secaucus-based Jamesway Corp., which is closing 90 stores in the Northeast, plans to unload $250 million worth of goods.
While the sales are a dream for consumers, they're a nightmare for competitors who fear they'll have to drop prices further to remain competitive.