Why More Brands & Retailers Will Go Bankrupt in 2017

The bankruptcy debacle that plagued retailers last year may be far from over.

While no major footwear and apparel firms have added their names to the bankruptcy court docket yet, experts say it’s only a matter of time.

In a note distributed Tuesday, Citi Research analyst Kate McShane said she sees signs that more Chapter 11 filings from fashion firms will pop up in 2017.

Store closures and bankruptcies are likely to remain a painful common theme throughout the next year (or longer),” McShane wrote after attending the ICR investment conference this week.

But it’s not all bad news: “A resizing of brick-and-mortar doors should be a long-term positive for the industry and the brands or retailers that offer a differentiated product or experience,” McShane added.

Other experts have said that they also expect to see retailers move more aggressively to rationalize their store fleets and shutter more doors in 2017 — although the jury is still out on whether these changes are ultimately a positive for the industry.

Certainly, some casualties are expected along the way.

For traditional brick-and-mortar retailers, turning a profit in an increasingly digital landscape is proving to be more difficult. While some firms have the resources to restructure, regroup and move ahead, others won’t be so fortunate this year.

The first major sign that 2017 could bring as much or even more trouble for retail than its predecessor may have come when struggling department store chain Macy’s Inc. said last week that it would slash 10,100 jobs in addition to forging ahead with its plans to close 100 stores. The company — along with Nordstrom Inc. and other big chains — has been in the midst of a restructuring plan that involved scaling down its brick-and-mortar business and moving more resources online to address consumer shifts.

This has become the mantra for many traditional retailers, but the fruits of their omnichannel labors are sometimes slow to yield.

Either way, experts say 2017 belongs to the brands and retailers that can get consumers engaged and excited about shopping for things again.

For those that aren’t able to, there’s an empty slot waiting for them on the bankruptcy court docket.

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