Fred’s Files Bankruptcy Protection to Close All its Stores

Fred’s Discount Retailer announced Monday that it is declaring bankruptcy protection under Chapter 11 and closing all its stores. According to the company, liquidation sales will be completed at all retail locations within the next 60 days. The bankruptcy is a signal that cost-cutting measures like the closing of hundreds of unprofitable stores or inventory clearance sales could not save the retailer. Fred’s has been experiencing yearly losses since 2015. In 2018, Walgreens purchased its pharmacy files. In June 2017, merger talks with Walgreens, Rite Aid and Rite Aid failed due to federal antitrust concerns. The company’s fate is now uncertain. According to a filing made with the SEC, the company had 556 discount merchandise shops in 15 states throughout the Southeast as of May 4.

Total Retail’s View: In recent years, the retail pharmacy industry has been subject to disruption, such as consolidation (e.g. buying PillPack, CVS Health purchasing Aetna) and the entry of online players onto the market. This is due to an increase in online shoppers, greater access to online and web-based health services and the increasing implementation of eprescriptions in hospitals, among other healthcare services. These changes in the market have weakened traditional brick-and-mortar pharmacies, including those that are local to Fred’s or other established brands. Retail pharmacy is experiencing the same challenges as department stores and specialty apparel retailers in malls. In addition to declining store traffic and increased online competition, there has been a surge of bankruptcy filings and store closures. The top players in this sector are consolidating their positions, while others like Fred’s are having to leave the field.







GameStop will close up to 200 stores by the end of the year

GameStop plans to close between 180-200 underperforming stores before the end of its fiscal Year , according to CNBC. After disappointing financial second quarter earnings, the video game retailer announced this earlier in the week.

CNBC reported that GameStop CEO George Sherman stated Tuesday on an earnings call with analysts, “Optimizing the store base for an ever-digital world is essential for both the future and increasing profit productivity.” Sherman stated that the company has the opportunity to “do even better” and increase profitability by reducing the number stores in certain markets. CNBC reported that GameStop currently operates over 5,700 stores in 14 countries.

Total Retail’s View: More consumers are choosing to play digital games on their digital devices or computers than physical ones. Consumers are also increasingly buying games online rather than visiting a GameStop brick-and-mortar location. Sherman and GameStop’s managers are closing down underperforming stores to help optimize their stores. They also plan to shift resources to be more competitive in the digital market. CNBC reports that GameStop has launched a new website and customers can now buy games online and pick them-up in-store.



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