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Retailer Liquidations Hurt Existing Retailers

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This is something we heard at the New York ICSC event from a few people. Liquidations are ending up hurting existing retailers because people are going to the stores going out of business to cash in on really deep discounts. So, for example, consumers are going to Linens 'n Things liquidation sales instead of visiting Bed, Bath and Beyond. The Wall Street Journal has more on this phenomenon.

The sour retail market is leading to a flood of store closings, followed by the inevitable going-out-of-business sales. In a vicious cycle, the "everything must go" banners and ads are siphoning off shoppers from already-struggling retailers, further weakening their results, analysts say.

In the last few weeks, retailers ranging from Signet Jewelers Ltd. to Bed Beth & Beyond Inc. blamed competitors' liquidations, in part, for sharply reduced revenue and profit in the fiscal third quarter.

On Thursday, KB Toys Inc. said it has returned to Chapter 11 bankruptcy and will liquidate all of its more than 400 mall-based and outlet stores. The company said it plans to quickly start going-out-of business sales "to take advantage of the last two weeks of the holiday selling season."

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Elaine Misonzhnik

Senior associate editor Elaine Misonzhnik has been writing for National Real Estate Investor since June 2006 and has covered commercial real estate for more than 12 years. She first became...
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