Gottschalks Potential Bankruptcy Concerns City

The headlines from a few days ago was that Gottschalks is likely to run out of money by the end of the month. Where does that leave Davis which has had a Gottschalks store in the University Mall since 1999? Well Gottschalks is currently the only department store in Davis. And with Mervyn’s going bankrupt and liquidating its stores, it may be the end of the line for such mid-range stores that are stuck between the low-line big-box retail stores like Target and Wal-Mart but a step below the higher end stores like Nordstrom’s or Macy’s.

This would be particularly bad news for the County Fair Mall in Woodland. Target has moved from that Mall to the larger location off Road 102 by Costco. That move was planned, but now coincides with the loss of Mervyns and now it appears Gottschalks.

The impact for Davis is not good either, according to economic development director, Sarah Worley who told the Davis Enterprise yesterday:

“The city is gravely concerned about the difficulties the Gottschalks company is having and any possible closure of the Davis store. The store is a valuable community amenity as an important anchor for the University Mall shopping center, in meeting local shopping needs and for its generation of sales tax revenue. The city is seeking more information about the situation for the Davis store and will continue to monitor its status.”

And yet that location, in a way hidden in the back of the Mall, in a very small store, has never been that great for Gottschalks.

Most interesting perhaps is the fact that one of the culprits in the downfall of stores like Gottschalks is the rise of big-box retail.

“The last few years have also been grueling for many regional mid-range retailers around the country, which have had trouble competing against national big-box discount stores like Wal-Mart and high-end department stores like Nordstrom’s.”

The irony is that the city laments the loss of a store but their policies paved the way for its demise. The fact of the matter is that even under better circumstances, Gottschalks was probably doomed in Davis the moment that Target was allowed to come in. When all things are even, a store like Gottschalks probably was going to have trouble competing against a Target. But things of course were not even.

Gottschalks was stuck in the back of a small location, with a small inventory. Target would be able to severely cut into their market in Davis. The end of Gottschalks is probably coming a bit faster because of the economic downturn, but it was probably inevitable.

Undoubtedly reactions to this will be mixed. For people like me, I get a good percentage of my clothing at Gottschalks–you can purchase decent but still affordable clothing at its locations. Its loss would leave Davis without a department store. To me, Target does not fill that void, although I suppose it does people a place to get cheap clothing.

In the end, the question will invariably be who else is going to become a culprit to Target. Are we going to lose a number of smaller chain stores? Are we going to lose a number of locally owned stores? Is Target coming to town going to reduce our shopping options rather than expand them? Is it going to force the city to bring in other big-box stores to compete if the city wants to have a variety of options rather than be a one-shop town?

These are all questions that have been pondered for quite some time, but given the economy, given the precarious nature in which a lot of merchants are living these days, the threat is becoming even more real right now. Target is about to pour their foundation and then we will see what the real cost of bringing in Target to Davis is. The timing probably couldn’t be worse given the shape of the economy. Many places that might have survived in better economic times will probably see this as their death knell.

—David M. Greenwald reporting

Author

  • David Greenwald

    Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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Budget/Fiscal

29 comments

  1. I am surprised that you are defending Gottschalks. They are not locally owned, and do not add the …value… of local ownership to a the community of most of the locally owned retailers that you typically defend. They appear to employ mostly university students.Department stores are struggling, but so are other retailers. In fact, many different types of retail chains that are filing bankruptcy now – big boxes like Circuit City, Linens and Things, and clothing stores like Mervyns. Undoubtedly there will be more in the next month or so. K Mart has been through bankruptcy a few years ago. Stores or businesses do not have a …right… to oontinue to exist — changes in consumer preferences and business models change. Those stores or companies which cannot or refuse to adapt will suffer. Businesses that are not well managed also suffer in competitive times. While sometimes painful for those directly involved with a failing business, this model ultimately results in better products and value for consumers, which ultimately drives business models.There is plenty of store space in downtown Davis for some enterprising business person to open a store which would replace the goods that apparently only a few people in Davis purchase at Gottschalks.Bring on Trader Joes!

  2. I second Adam Smith.Gottschalks is hardly locally owned. I’d also add that very few people shop at many of the downtown retailers and target hasn’t even come yet.Every time I look inside stores like Pink-a-dot people just arent there.Besides which, you can’t get a tv set unless you buy big box or shop on the internet.

  3. ……… The headlines from a few days ago was that Gottschalks is likely to run out of money by the end of the month. ………Headlines from the Davis Enterprise , looks like the local daily beat you to it again ,Sorry blog boy , but the Enterprise is the cats meow ..

  4. Gottchalks has been in financial difficulties for YEARS, and that has nothing to do with the local Target that has not even been built yet. I don’t see the nexus between Gottchalk’s demise and big box retail. The merchandise is quite different. Actully JC Penney’s is probably a bigger thorn in the side to Gottchalks than big box retail. Smaller mid level retail stores are having problems just as mid level airline companies like Jet Blue are having problems. In economic downturns, big companies like Macy’s can whether the storm, whereas smaller outfits have much more trouble. What is really going on IMHO is that only bigger chains of all kinds are financially surviving because they have the cash flow to cover those stores that are not doing well.

  5. Gottschalks is hardly locally owned.Gottschalks was founded by Emil Gottschalk in 1904 in Fresno, California. It’s not …local,… but it is headquartered in the Valley, just a brief 3 hour drive away.

  6. Anonymous 10:34 said:…Gottschalks was founded by Emil Gottschalk in 1904 in Fresno, California. It’s not …local,… but it is headquartered in the Valley, just a brief 3 hour drive away….Not sure of your point…Gap was founded in 1969 by Don and Doris Fisher in San Francisco, just a brief 1.5 hour drive away… do you welcome them as a …locally owned… retailer?

  7. Fisher bought LP’s Mendocino Holdings and Pacific Lumber’s Humboldt holdings and is trying to manage them under sustainable forest practices. While Gap has come under much criticism for their third world labor practices their committment to California sustainable forestry is exemplary. So the issue of how local something needs to be to be local is more then just a provincial issue.

  8. …Gottschalks was founded by Emil Gottschalk in 1904 in Fresno, California….Gott in English means God and schalk in English means …scoundrel…. Thus, it is definitely not a …local… store.

  9. How ridiculous to blame Target for this one and it isn’t even open yet. Gottchalks is dying because no one shops there. Also, I thought Gottchalk’s was considered …big-box…. I am not a mega-liberal so I don’t know exactly where the line is – wouldn’t you guys be happy that this store failed?This doesn’t change anything with Trader Joe’s.How do you know that? This location wasn’t available until now and maybe they would consider using this space instead of where RAS is, maybe not in the immediate future, but when the economy picks up and they are ready to look into it again.

  10. We don’t need Trader Joe’s. What a waste of space that would be. I buy shirts, socks, pjs, and shoes sometimes at Gottschalk’s. Not always, but sometimes. We don’t need Trader Joe’s when we already have enough stores. It looks like West Davis needs a grocery store. Council is stupid if they allow themselves to be bullied into having TJ’s locate at University Mall.

  11. Dude, are you kidding me? this department store has been pegging the lame meter for years. I am surprised it took this long to die in that poor location, along with their poor outdated assortment of product. Target would certainly have killed it because they actually sell higher quality merchandise at much better prices. in our economic system, those are the stores that will win. But it did not take Target to do it, it is the economy that is pushing all the also-ran retailers into the pond. They will by no means be the last. many retailers all over the country, many malls, are all going to bit the dust. New trees will grow from the ashpiles of the old. That is the way it works.Also, many downtown retailers are horribly overpriced, and do not keep consumer relevant busineess hours. Closed on Sunday? Hello? No business serious about surviving will be closed Sundays. Time you could get away with that ended, well, oh about 40 years ago! The stores that are aggressive, competitive, personal, and open will do just fine.Consumers do not see it as their job to make sure manufacturers and retailers make a profit. (Drucker) Businesses that bring total value (not necessarily lowest price, but rather total value) consumers care about will win. Some businesses downtown get this, and others think they should get to survive just because they are small and local. Hello, earth to cluemonster, pick up the phone. Not gonna happen

  12. …Council is stupid if they allow themselves to be bullied into having TJ’s locate at University Mall….Bullied? What are you smoking? The council has begged Trader Joe’s to come to Davis. The council has paved the way for TJ to locate at the U-Mall. You may not like what TJ sells, but most people in Davis like their wares.

  13. Gottschalks problems have ABSOLUTELY nothing to do with Target coming to town!! Actually there hopes lie with a bailout from a Chinese firm…how does that fit in with Davis’ politics?

  14. As a shorter guy (5’6…),I have had good luck finding pants with a 29… inseam at Gottschalks in Davis. If they don’t have that length in stock in a style I like, staff there will kindly call around to see if other Gottschalks stores (in Woodland, Vacaville, and Sacramento, for example) can meet my needs. Try getting that kind of service from big box stores with minimal on-floor staff such as Target. I will miss Gottschalks if it has to leave.

  15. …Gottschalks was founded by Emil Gottschalk in 1904 in Fresno, California. It’s not …local,… but it is headquartered in the Valley, just a brief 3 hour drive away….Not sure of your point…Gap was founded in 1969 by Don and Doris Fisher in San Francisco, just a brief 1.5 hour drive away… do you welcome them as a …locally owned… retailer?And Trader Joe’s was founded in the late 60’s in southern California. How local is local?

  16. Shop at local downtown shops? That’s not happening with middle-income people here. Have you priced a pair of womens pants or a decent blouse at one of those …upscale boutiques… like Pink-A-Dot?But I agree that Gottschalks is not closing because of Target. There was absolutely nothing there, clothingwise, for someone of my age and aesthetic–that is, a 30something, youngish, fairly hip, professorial type. Nothing. It was all low-rider crack-revealing jeans and hoochy-mama shirts, or dowdy matronly wear.I object to whomever implied that Gottschalks was undesirable because they only employed students. As much as you may not like them, students help drive the local economy–whether they work at Gottschalks or your vaunted downtown bow-teeks.

  17. I think you have a certain Enterprise columnist hammering you. Anonymous 9:43 as well as numerous posts the past month consist solely of pointing out how much better the Enterprise is than you.The irony on this topic of course is the fact that Gottschalks is probably the Enterprise’s main advertiser, other than Nugget.I don’t understand the comparison to the Enterprise and this blog. Both are totally different forms.

  18. many mid sized clothing stores have closed over the past 8-9 years due to target and walmart and these closed clothing stores were not replaced by other stores to fill the void that was left.gottschalks has good cloths and they are really low cost if you use the discounts the store offers. i’ve actually never shopped in a store that had so many nice looking shirts and sweaters.target and walmart survive because they sell soap and food and things you have to buy over and over but their cloths are gross.there is no diversity in shopping anymore with nothing but target, walmart, high priced stores and weird store like trader joes left. a visitor to a city who never saw a gottschalks before may be inclined to go in there to shop but who wants to shop at a target or walmart while visiting a new city only to see the same tacky cloths sold from coast to coast?gottschalks has great cloths. there are going to be few choices left in clothing and if stores keep closing because they couldn’t get loans new stores will not emerge to take their place since they won’t get loans either and the past 10 years has proven this.people are already sick of target and walmart and refuse to go in those places and when they are the only stores left and fewer people shopping overall, the revenues will dry up.

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