E-commerce Brand Revitalization Surges as more Brick-and-Mortar Retailers File for Bankruptcy

With a dramatic consumer migration to e-commerce during Covid-19 and a corresponding shuttering of already struggling brick-and-mortar stores, well-known retail brand names have been acquired on the cheap out of bankruptcy auctions to serve as a traffic lure for new e-commerce sites selling similar merchandise.

Past favorite retailers such as Pier1, RadioShack, Dress Barn, Linen & Things, Model’s, Lucky Brand, ALDO, and True Religion, already buried in corporate debt and teetering on the edge of survival, have moved into bankruptcy, liquidation, and eventual sale to venture capital backed investment funds looking for a lucrative relaunch into e-commerce. All of these retailers, far behind the digital and social media curve needed for successful e-commerce, simply lack the savvy to do an online turnaround themselves. An inability to eliminate shipping costs or offer multi-category shopping, has led consumers to make similar purchases from competitive retailers.

Although not generating sufficient revenue, these struggling retailers are still household names to many consumers. Investors buy the trusted, highly recognized brand name in the hopes that they can capture consumer familiarity and trust of the brand and translate that into e-commerce purchases in the same category. From electronic gadgets for Radio Shack to the eclectic international home décor of Pier 1, new e-commerce sites get constructed using the brand IP, with the hopes that when searching sites such as Google to find an item, consumers will leap first to the recognized brand name in that category. Also, as it takes huge marketing budgets to build an online consumer brand from scratch, these e-commerce buy-out deals leverage strong consumer brand equity and goodwill to jumpstart online sales. With the sales of the IP and trademark, the purchasers also get access to domain names, loyalty rewards members, social media handles, as well as any existing customer database.

With an anticipated wave of even more brick-and-mortar retailers filing for bankruptcy after the holiday season, this wave of e-commerce brand revitalization will continue to profligate.