Several contemporary physical stores that have enjoyed the market boom once upon a time, with increased profitability, massive footfall, and a large-sale customer reach, are now dwindling in the retail sector. With the advent and increased demand for remote shopping using websites such as Amazon and Shopify, the trend of reaching out to physical stores and buying expensive goods is almost over. Many eCommerce companies shutting down in 2022 have failed to comply with the latest transformations in consumer demands.

Modern retailers are at a turning point as retailers face challenges such as complex physical stores, colossal debt, and inefficient operations. This all started with the Covid-19 pandemic that further exacerbated these problems, accelerating the end of some retailers with lower sales and higher debt over the past few years as consumer tastes changed. The pandemic has driven many bankrupt eCommerce brands in 2022 and doomed a few symbolic names such as the likes of Neiman Marcus and JC Penney. While the mall had reduced foot traffic since before the pandemic, the stay-at-home order continued to shift shoppers to online shopping, spending cash on necessities instead.

Here is a list of 10 eCommerce Brands Going Out Of Business In 2022

1. Escada America

Founder: Margaretha and Wolfgang Ley
Year Founded: 1978
Location: Munich, Germany
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Escada America's Company's Monthly Unique Visitors: 35,788
Escada America's Order Volume: 500 - 1,000
Escada America's Company's Web Sales: $5M - $10M

Escada America filed for Chapter 11 Bankruptcy in mid-January 2022 and is one of the eCommerce companies closing down in 2022. The pandemic has played an essential role in driving Escada America, which has suffered from myriad problems, into bankruptcy over the past few years. Escada America is a Germany-based brand that suffered from over-expansion, poor governance, and high leasing, making the store poorly equipped to survive the pandemic. The company closed five of its ten locations in the United States due to its bankruptcy proceedings.
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2. ABC Carpet & Home

Founder: Evan Cole
Year Founded: 1985
Location: New York, USA
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ABC Carpet & Home's Company's Monthly Unique Visitors: 28,700
ABC Carpet & Home's Web Sales: $10M - $25M

ABC Carpet & Home deals in premium household goods. It survived the pandemic but was doomed because of reduced traffic and delays in building flagship stores, the company struggles to build a digital presence to match the store's experience and supply chain disruptions. The company will continue its normal operations until the end of October and look for buyers at an auction. It filed for bankruptcy in September 2021.
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3. Lorna Jane

Founder: Lorna Jane Clarkson and Bill Clarkson
Year Founded: 1990
Location: Singapore, Michigan, USA

Lorna Jane's Monthly Unique Visitors: 4996
Lorna Jane's Web Sales: $1M - $5M

Lorna Jane is an Australian-based activewear retailer has filed with the California Bankruptcy Court for Chapter 11 protection. Despite a surge in eCommerce revenue during the pandemic, retailers' in-store sales fell in 2020, making it impossible to meet their rent promises. The company advertised a false statement saying its clothing can defend the body against the Coronavirus, because of which it was fined $3.7 million in July 2021. The owners strategically filed for bankruptcy as a reason to terminate the lease of 21 US physical stores while still selling online.
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4. L'Occitane

Founder: Olivier Baussan
Year Founded: 1976
Location: Rancho Cucamonga, USA

L'Occitane's Monthly Unique Visitors: 190,948
L'Occitane's Order Volume: >50000
L'Occitane's Web Sales: $100M - $250M

The US division of French beauty retailer L'Occitane was suffering from an overdue rent and was about to terminate 29 'unfavorable' leases with reduced sales. The restructuring was planned and completed in August, and the company withdrew from Chapter 11 bankruptcy which was filed in January 2021.
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5. Francesca’s

Founder: Chong Yi, Kyong Gill and Insuk Koo
Year Founded: 1999
Location: Houston in the United States of America

Company's Monthly Unique Visitors: Less than 100
Order Volume: <100
Company's Web Sales: Less than $1M

Francesca announced that it would close about half of its mall stores in the United States after it filed for bankruptcy in December 2020. The jewelry and women's clothing were already going through rough sales, and in February 2021, Francesca’s was sold for $18M.
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6. Alex and Ani

Founder: Carolyn Rafaelian
Year Founded: 2004
Location: Cranston in the United States of America

Alex and Ani's Monthly Unique Visitors: 42,269
Alex and Ani's Order Volume: 1,000 - 5,000
Alex and Ani's Web Sales: $50M - $100M

Alex and Ani filed a proceeding with the Delaware Bankruptcy Court. The brand was famous for its bracelets. But later, the brand faced a recession caused by legal complexity, mismanagement, and executive changes, and couldn’t adapt to the online consumer preferences and the pandemic. Revenues fell, because of which it had to file for bankruptcy in June 2021.
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7. Washington Prime Group

Founder: Robert J. Laikin, Chairman Louis G. Conforti, CEO Mark E. Yale, CFO
Year Founded: 2014
Location: Columbus, USA

Washington Prime Group's Monthly Unique Visitors: 2407

The Washington Prime Group mainly dealt in Real Estate. They closed about 100 malls under pandemic pressure as the company could not pay the rent. The revenue also decreased. WPG secured funds in debtor-owned investments to continue its business to reduce balance sheet leverage. It later restructured an agreement with its creditors. It filed for bankruptcy in June 2021.
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8. Guitar Center

Founder: Wayne Mitchell
Year Founded: 1959
Location: Westlake Village, USA

Guitar Center's Monthly Unique Visitors: 2,140,734
Guitar Center's Order Volume: 10,000 - 50,000
Guitar Center's Web Sales: $250M - $500M

Guitar Center, the largest US musical instrument retailer in the US, suffered from a massive debt even before the pandemic. It filed for bankruptcy in November 2020, but in December 2020, after a capital injection that repaid $800M in debt, the Guitar Center was out of bankruptcy.
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9. Paper Source

Founder: Susan Lindstrom
Year Founded: 1983
Location: Chicago, USA

Paper Source's Monthly Unique Visitors: 220
Paper Source's Web Sales: Less than $1M

The stationery retailer Paper Source filed for bankruptcy because of the cancellation of weddings and the closure of educational institutes in March 2021. The company had given its executives a total bonus of $1.5M while some suppliers were reportedly unpaid. Thankfully, Barnes & Noble took over Paper Source and helped it get out of bankruptcy.
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10. Belk

Founder: William Henry Belk
Year Founded: 1888
Location: Charlotte, USA

Belk's Monthly Unique Visitors: 1,656,862
Belk's Order Volume: >50000
Belk's Web Sales: $500M - $1B

Belk immediately received approval for the recovery plan – the departmental store chain came out of bankruptcy just one day after filing the bankruptcy in February 2021. Belk was established in 1888, but the Covid-19 pandemic reduced sales and forced it to become bankrupt. As part of the restructuring, Belk reduced its debt and raised new capital to continue operating its 291 stores.
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Conclusion

The retail sector is gradually recuperating from the true reality of the post-Covid scenario. According to Axios, compared to 52 retail bankruptcies in 2020, there were only 21 in 2021, which is a 60% decrease. The fall of many commercial and physical stores is noteworthy, but this certainly doesn’t mean the trend is over. Customers have only shifted their preferences and retailers must follow the customer trail. Else they too may be out of business.

Retailers need to be cautious about the transforming trends, rise in interest rates, and their mounting debt, which needs to be lowered. eCommerce shopping is one of the major reasons for the suffering of physical stores. Any store incapable of handling its increasing debt, failures, and inability to adapt may suffer a shutdown.