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Fresno Discount Store will Close
Sep. 10, 2009
Bethany Clough / The Fresno Bee
Discount retailer Smart Buys at Stupid Prices is closing all its 22 stores, including the Fresno store that opened less than a year ago, according to the Fresno store's manager. Experts say the closure is proof that it takes more than low prices to make it in this economy. The Washington-based chain, which sells surplus and close-out merchandise from other retailers, has stores in California and Washington.
Steve Wells, manager of the store at West Shaw and Brawley avenues, said his store will likely close in late October or early November. Liquidators from the Gordon Bros. Group are in the store, preparing for the going-out-of-business sale, he said. Wells said a representative at the company's corporate office told him all the stores are closing. Calls to the Washington-based headquarters were not returned. Employees at the Merced store -- which opened in July -- and the Stockton store confirmed that their locations will close as well.
Another store had opened this summer in Pinole, in the Bay Area. The chain -- which sells electronics, clothing, food products and many other items -- was hoping to expand in the Central Valley, including possibly into Modesto. When asked why the company is shutting down, Wells said: "It's because of the California market. The economy has been very tough, and they just haven't seen the sales results."
Closing stores so soon after opening them is unusual, said Scott Testa, a professor who follows retail at Cabrini College in Philadelphia. He noted that he doesn't have first-hand knowledge of what happened with Smart Buys. "Opening stores in the summer and closing down completely in September tells me that ... maybe they grew a little too quick, or maybe they lost some financing," he said. "Those indications tell me that something horribly went wrong." When retailers run into financial troubles, they typically stop opening new stores and focus on becoming financially sound, sometimes closing underperforming stores, he said.
Midsized retailers have a tough time competing against larger chains, and Smart Buys may have faced some of the same challenges that the now-closed Gottschalks faced, Testa said. Such stores have less pull with manufacturers than large chains, he said. "The smaller chains sometimes get stuck with the crumbs," he said. "If there's a hot product that a lot of people want, the Best Buys and the Wal-Marts of the world, they usually get first dibs."
Bill Rice, a marketing professor at California State University, Fresno, agreed, saying Smart Buys' low prices alone weren't enough to attract consumers. "I think they thought they could be like [a] dollar store," he said. "Unfortunately the dollar store isn't selling throwaway stuff -- they're selling durable, long-term stuff." Between 16% and 18% of shoppers buy based solely on price. Others value price, but also look for retailers they trust and find authentic, Rice said. "They didn't have enough connectivity to the consumer," he said. The closure may be a particularly hard blow to some of the more than a dozen or so employees at the Fresno store. Fifteen of them were hired after Circuit City laid them off in March when it closed.
http://www.fresnobee.com/170/story/1633826.html
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