Sears bankruptcy a clear warning to other retail stores - FOX34 Lubbock

Sears bankruptcy a clear warning to other retail stores

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LUBBOCK, Texas -

A giant in the retail industry for 125 years, may be no more.

Sears filed Chapter 11 bankruptcy Monday in a last-ditch effort to restructure the company's debt after missing a $134 million deadline. 

The company will close 142 more stores, including Lubbock's outlet.

Jeff Nicholas, a financial consultant, said Chapter 11 bankruptcy is typical in these situations, as it is a "last resort" strategy to keep business operating. 

"They usually make the decision after they've really explored all other avenues when it comes to how to restructure the company," Nicholas said.

He said this is a warning for other retail stores: Embrace digital, or go bankrupt.

"It is a big message, loud and clear, to say hey how are we going to adapt to the times, how are we adapting to what the consumer want? The consumer drives the economy in that way, and as we grow, as we evolve, I think it's time for some of these companies to take a step back if they haven't already and say hey how can we adapt, how can we change," Nicholas said.

The U.S. Department of Commerce reported e-commerce accounts for 11.9 percent of retail sales.

Nicholas said he expects that number to rise exponentially with the evolution of technology and closings of stores like Sears. 

"When you look at retail and the shift that's going on, look at Amazon, look at how Walmart is having to adjust when it comes to online shopping, things of that nature, I mean, we can pick up our phones and in a couple clicks, have what we could, but instead of going down to the store, we could have it shipped right to our door for a fraction of the cost," Nicholas said.

He said the retail industry still has plenty of potential, despite many marquee stores closing this year, as he added consumer outreach is the key going forward. 

"As long as there's consumers and as long as there are goods, you're going to have a driving economy. But it goes back to adapting and companies needing to adapt their business model and how to reach out to the consumer, as opposed to losing faith in the consumer itself," Nicholas said.

In fact, a new study from the International Council of Shopping Centers found when retailers invest in brick-and-mortar stores, its online presence thrives. 

Nicholas said finding a balance of a brand's physical and digital presence is essential, and utilizing social media for it is critical. 

"Social media is huge. You look at the younger generation, that's where they go. We go online, we're pulling out our smartphones, we're going on our iPads, retailers ought to take note and adapt and really utilize social media to their benefit," Nicholas said.

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