Is This Where We're Going?

The Sunday New York Times Magazine ( 8-30.09) had a wonderful article by Ron Walker relative to" Linens'n Things. This well known, national firms went belly-up in May of 2008 and filed for bankruptcy.

The last of its' 589 stores closed In January 2009." In the liquidation version of bankruptcy, every possible asset of a failed firms, from office chairs, to intellectual property is sold off to pay creditors ( who end up with pennies on the dollar just the same.")

"Well it's trademarks and-the-like were acquired for a reported $1 million by a joint venture."

"The same joint venture also purchased Polaroid and Sharper Image brands in the 'rubble of recent bankruptcies'."

In 2007 the firm Linens'n Things had sales of around $2.8 billion. The people who purchased the trademarks also acquired a data list of 5 Million e mail address!

The new joint venture does plan to revive, or build a new and innovate traditional business.

The proposition of this distinctly Great Recession model is snapping up valuable assets on the cheap and using low-labor tools of Web commerce-- outsourcing electronic ordering etc.,- to stimulate a version of the original business.

The new version of the company has virtually no real estate costs, no obligations to pay it's predecessor's debt."

Quote a Mr. Craig Venzia, "The economy today is cleansing business right now."

"The new Linen'Things, he argues is a model of efficiency, offering competitive prices and freeing the business from the cumbersome liabilities that come with big box leases, pricey brand-building campaign or a work force.

"It really reflects," he said," where the world is going."

If the now vacant 589 stores have 30,000 SF each this would equal 17,760,000 SF of retail space. or about 405 acres of space under roof.

At a lease low-number of $10.00 nnnn psf the income loss to property owners equals $ 177,600,000.

How many employee's lost their jobs? At 30 employees per store ( most were opened 12 hours a day) would equal 17,670 individuals.

I, for one, do not like this new model but I have to accept the power of the Internet and this is indeed, a very, very, "Brave New World."

We are in a sea of change!

Bill McInerney