Tuesday, August 5, 2008

Bankrupt!


Perception can be worse than reality.


Boscov's filed for chapter 11 bankruptcy protection yesterday. It gives the company a chance to reorganize its finances. While ten stores are closing, it does not signal that the chain is going out of business.


Not yet.


There's blood in the water. Boscov's has to worry about more than the bottom line. It has to worry about how consumers perceive the company. Why would someone make a major purchase, on an item with a long warranty, if they think the company is unstable and might go out of business before the warranty is through? How can you return an item if the store is no longer there? What if workers have no long term faith in the chain? Will they give their best?
Chapter 11 might give Boscov's a chance to get its financial house in order. It also has to convince shoppers that it's here for the long run.


What's the price of "trust?" How much does "confidence" cost?


I saw the list of stores Boscov's is closing. Hindsight being 20/20, Boscov's shouldn't have been in those places in the first place. The demographics were all wrong. Boscov's is a good mid level chain that tried to play in upscale malls. Obviously, it didn't work.


I like going to Boscov's. Wandering through the candy department, past the toys and sporting goods, and the appliances-- it reminded me of the downtown stores I grew up with. Those old stores are gone. We'll see if Boscov's goes along with them.