It could spell trouble for retailers.
Bloomberg reports that Sports Authority’s collapse has made retailers concerned about the way they have been operating.
“You could make the argument that given the state of retail, everyone’s going to be analysing — whether or not it’s retailers or lenders — what makes the most sense and, in particular, vendors,” Mike Murray, senior managing director at Wells Fargo & Co, said to Bloomberg.
The consignment business model is one area that retailers are concerned about, as Bloomberg notes that Sports Authority explained in court documents that the business had $85 million worth of consigned items in stores at the beginning of its bankruptcy.
This puts companies in a sticky situation, Bloomberg reports: does the retailer or do the vendors own the goods that are being sold off?
Sports Authority’s downfall has been a burden for top tier brands, such as Under Armour, which UBS analysts noted had “bloated post holiday ’15 inventories.”
Ironically, one of the things that plagued Sports Authority — a lack of a real shopping experience — is something that Nike, with its high-tech personalisation and run clubs, and Under Armour, which plans on opening a store that fuses experiences with traditional shopping in FAO Schwarz’ former Manhattan home, thrive upon.
Sports Authority’s downfall comes at a time that other once-dominant retailers failed. It came several months after Quiksilver and American Apparel filed for Chapter 11 bankruptcy. This spring, former teen stalwarts Aeropostale and PacSun filed for bankruptcy.
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