Although the failure of large chains is an exceptional event, Bon-Ton's fall into bankruptcy comes as little surprise.
For years, Bon-Ton has struggled to get customers into its stores and to persuade them to buy. This is partly an issue of location. Many of Bon-Ton’s stores were in areas where the availability of branded fashions and homewares was traditionally poor. However, while this once made them a focal point and a destination for local shoppers, the Internet has done much to change this dynamic and has made the stores less relevant, and arguably less necessary, than they once were.
This is one of the reasons why Bon-Ton has tried to improve its assortment and build a stronger omnichannel proposition. To be fair, there were some signs that these programs were delivering, with initiatives like ‘buy online, pick up in store’ helping to generate some customer traffic and interest.
However, this progress was never enough to transform a struggling business, and the meager sales gains they delivered were wholly insufficient to turn around Bon-Ton's fortunes.
The harsh reality is that while Bon-Ton’s management put in great effort to make the business sustainable, they were always running up a down escalator.
With a massive debt load and a business that was far from being profitable at an operational level, Bon-Ton's financials were tipped firmly in the wrong direction. Ultimately, the only sensible option was to file for Chapter 11.
Even with breathing space, the future of Bon-Ton is uncertain. In our view, there are many stores and locations which are in terminal decline and where closure is the only sensible option.
A scaled down business may have a chance of survival. However, the Bon-Ton brand - and all of the associated names under which it operates - are far from healthy. They are undifferentiated, unclear and have become increasingly irrelevant to consumers. Even if the debt load was cut and unprofitable divisions culled, Bon-Ton would still be running up a down escalator to survive.
Neil Saunders is a retail analyst and the managing director of GlobalData Retail.