In September 2020, real estate companies Simon Property Group and Brookfield Property Partners purchased J.C. Penney for $800 million, taking advantage of the department store chain's bankruptcy filing in May.
The same real estate firms bought Forever 21 in February. Simon also acquired clothing retailer Brooks Brothers after its bankruptcy filing.
These purchases were meant to help ensure that the outlets keep paying rent at the shopping malls owned by these real estate giants
But there's also something else at play here.
These acquisitions signal the imminent end of the model of brick-and-mortar retail chains, a model that has dominated the U.S. retail landscape for decades.
You see, Brick-and-mortar stores were already shuttering before the pandemic.
Many retail outlets were struggling to stay profitable and competitive; the reasons for the struggle were many.
Some major apparel retailers never recovered from the Great Recession. Some private equity firms then bought up these troubled retailers, loading their balance sheets with massive amounts of debt and turning many retailers into “zombies.”
J. Crew, Neiman Marcus, Stage Stores, JCPenney, and Tuesday Morning were among the retailers to file for bankruptcy during the pandemic.
Now with e-commerce stealing more and more business, brick-and-mortar locations are struggling to stay relevant.
But are these the first signs of the Great retail apocalypse?
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