Chapter 11: A Survival Guide

Mar 26, 2003
George Anderson

By George Anderson

The odds are not in your favor if you are a retailer trying to emerge from
Chapter 11 bankruptcy protection, according to a research report from the Clear
Thinking Group.

Seventy percent of the retailers studied “were eventually acquired by other
companies or had significant assets liquidated.” Only 14 percent emerged without
a change in ownership or a significant decrease in number of stores.

Jim Welty, chairman, Clear Thinking Group said retailers fail because, “Companies
focus on the balance sheet, cash flow, financials, and real estate, while failing
to correct the issues that got them (to bankruptcy status) in the first place.
In many cases, these companies have poorly developed supply chain and customer
service processes. Few have maximized the use of technology to drive these processes.
With all the Y2K and ERP hype of the late ‘90s, less than 50% of all consumer
marketers have unlocked the power of technology to help drive their supply chain.”

Moderator’s Comment: What do you believe are the biggest
factors in retail store failures? Is there a retailer(s) that you would use
as a model for emerging successfully from Chapter 11?

Clear Thinking Group’s research indicates that retailers
are failing to utilize their technological assets.

We’d argue the failure to utilize human assets is even
more of an issue. Despite words to the contrary, companies count employees as
expenses to be cut and not as an competitive advantage to be developed.
Anderson – Moderator

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