While the bankruptcy has caused several popular chains to close their doors, it’s hard to call any of those retail businesses “essential.”
People liked to shop at Christmas Tree Shops, Tuesday Morning, and Bed Bath & Beyond, but none of those chains sold items that people needed or couldn’t easily get elsewhere.
The same can be said for two chains that managed to take advantage of Chapter 11 bankruptcy to reorganize and survive: Party City and David’s Bridal. Many brides would have been devastated that they didn’t receive the wedding dresses they ordered, but that’s not a life or death situation (even though it may seem like it at the moment).
Related: Popular Food Brand Files for Chapter 7 Bankruptcy and Heads into Liquidation
Many retailers have struggled because they sell things people want but don’t need at a time when many people are tightening their budgets.
Furniture retailer Wayfair, for example, has appeared on some default/bankruptcy watch lists. This is partly because people want to see most furniture up close and touch it before buying it, but also because American consumers have become cautious about making larger purchases.
Furthermore, the struggles, store closures, and risk of bankruptcy are not limited to these types of retailers. Essential chains that are often part of the fabric of their neighborhoods have also struggled.
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Pharmacy chains close many stores
ritual of help (RAD) – Get a free report, a struggling retailer that has considered filing for Chapter 11 and closing about 500 of its 2,100 stores, can be considered an essential retailer. And while the chain plans to reorganize and keep most of its stores open, it is $3.3 billion in debt, so there’s no guarantee it will survive long-term.
But while Rite Aid may be the only pharmacy chain facing bankruptcy, the retail industry as a whole is seeing several chains plan to close some stores. CVS Health (CVS) – Get a free reportpharmaceutical market leader by most standards, has been closing 300 stores a year since 2021.
“The company has been evaluating changes in population, consumer purchasing patterns and future health needs to ensure it has the right types of stores in the right locations for consumers and for the business,” the company said when the plan began.
Walgreens, (AMB) – Get a free report CVS’s biggest rival also plans to close stores, up to 450 of them in the US and UK, it said during its third quarter results call in June.
Additionally, Walmart (WMT) – Get a free report has reduced hours in 4,600 of its pharmacies by two hours a day. The company has denied reports that those cuts came about by asking pharmacists to take pay cuts.
Demand for pharmacies remains high
While approximately 1,500 pharmacies have closed in the United States and the entire Rite Aid chain faces at least some risk, demand for pharmacy services has not diminished. Some of that demand, however, has moved online, which has contributed to chains closing marginal stores.
“The challenges facing pharmacy operators are serious and the reported closures of large pharmacy chains are significant,” said Mark Ryski, a prominent retail author and CEO of Alberta consulting firm HeadCount, he recently told RetailWire. “However, demand for pharmaceuticals is and will remain high, in part driven by an aging population that will require more, not fewer, health services.”
Several commentators proposed a response to markets that are losing access to big chains.
“There remains one group, the more than 20,000 independent pharmacy operators, who have repeatedly demonstrated their resilience,” wrote Dave Wendland, a member of senior management at the consulting firm HRG. They are “(dedicated) to patient care and accessibility with an unwavering focus on health.”
Ryski echoed that sentiment.
“Online pharmacies, independent pharmacies, food retailers and other players will find a business model that works. I think independent pharmacies are uniquely suited to fill the remaining pockets in the market,” he added.
