The retail carnage continues as it has been a bleak year for retailers.
You can’t blame any one cause for Chapter 11 filings from companies as diverse as Bed Bath & Beyond, Tuesday Morning, and Christmas Tree Shops (which all were liquidated) to David’s Bridal and Party City (which survived).
Customer spending changes and inflation certainly have played a part as have rising costs due to supply chain problems. You can also broadly blame the higher cost of money making it much harder for struggling brands to find the funds needed to reinvent themselves.
Related: Popular retailer files Chapter 11, ending all operations
Many of these problems are tied directly to the covid pandemic. That global event forced non-essential retailers to close in many parts of the country while consumer spending patterns shifted.
Retailers, for example, that sold mostly dressier clothes struggled because with people not going to work, their demand dropped. Some companies like Wayfair and Peloton saw covid-related spikes which did not lead to long-term improvement in their business operations.
Others, with Chewy perhaps being the best example, got new customers during the pandemic and held onto them by proving to be a useful service during non-pandemic times.
The retail market has changed and some companies have become casualties of those changes. Showfields, a very different type of retailer, has become the latest once-popular and successful company to file Chapter 11.
Showfields only has a few stores.
Image source: Showfields.
Showfields files for Chapter 11 bankruptcy
Showfields literally calls itself “the most interesting store in the world.” It has locations in Washington D.C., Los Angeles, Miami, Manhattan, and Brooklyn. The eclectic retailer describes itself as follows on its website:
“We are a lifestyle discovery store. We feature a curation of mission-driven products, art, and events that can be found “IRL” for the first time. We amplify the mission of creatively stimulating partners, artists, and customers to create change and evoke new feelings,” the company wrote.
Showfields stores sell a rotating mix of digitally-native brands.
The missions the retailer supported have been interrupted as the company has filed for bankruptcy protection in U.S. Bankruptcy Court’s Eastern New York branch. The filing shared the company’s plans to focus on its Brooklyn and Washington D.C. and close its Miami and Manhattan locations. The L.A. store is not part of the bankruptcy filing.
Showfields has “entered into an agreement with the debt-financing company Pipe Technologies, Inc. whereby the debtor sold its accounts receivable and recurring revenues to obtain operating capital for its businesses in the aggregate amount of $1.4 million,” according to the filing.
Showfields blames the covid pandemic
“As with most commercial enterprises established almost immediately prior to and during the COVID-19 pandemic, the Debtor was plagued with lower-than-expected revenue streams from the Non-Debtor Stores due to low Member sales resulting from the national lockdown and gradual reopening of public spaces across the country,” the company shared in the bankruptcy filing.
That caused it to take a Small Business Administration (SBA) loan and to sell some of its account receivables in advance.
Showfields does believe it will be able to continue its operations after reorganizing its finances under a special provision of the bankruptcy code that allows certain small businesses to reduce their costs. Co-founder and CEO Tal Nathanel believes that his company has found a working model.
“While it took us a few years to fine-tune, today we know the right economic structure for new locations, as we have shown in our newest stores. We remain dedicated to our mission of redefining the way people discover and experience retail,” he said in a statement shared by RetailDive.
The Showfields website, which does not sell anything, has not been updated to reflect the bankruptcy filing. It still shows all the store locations but it’s only promoting events at the chain’s Brooklyn location.
