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Does Loehmann's Signal Discount Department Stores' Demise?

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Image via <a href="">New York Mag</a>
Image via New York Mag

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A month ago today, we learned that Loehmann's, the discount department store that was founded in Brooklyn in 1921 , filed for Chapter 11 bankruptcy for a third and final time. Along with stores nationwide, their five New York City locations (in Chelsea, the Upper West Side, Brooklyn, and two in the Bronx) have begun their liquidation sales, and their e-commerce site has already shut down.

Fans of the store, both old-time New Yorkers and those nostalgic for the days of yore, were up in arms when the news broke. As recently as June, we thought they were headed for a turnaround, with a new CEO and a remodel of the Chelsea store. But those changes weren't enough.

Even though shoppers are currently flooding the going-out-of-business sales, where were they in the past decade? Perhaps they were hitting up online flash sales, scoring current-season designer wares at the same price as past-season stock at Loehmann's. That's just one of the reasons why brick-and-mortar discount shopping as we know may be going extinct—or not.

Photo viaNY Press

As usual, we find that history is repeating itself. Dedicated discount shoppers lamented the demise of Daffy's in 2012, when the "clothing bargains for millionaires" store was no longer able to pay its vendors. "We've been bringing customers terrific bargains in fashion for more than 50 years, and we're all hunted out," the chain wrote to its fans on Facebook in August. Their response? "Where am I going to shop now?" Their eight Manhattan locations quickly went into liquidation sale mode and were all shuttered by October.

Similarly, tears were shed over the end of Filene's Basement, which had its own troubles even earlier. Looking to avoid bankruptcy, the company was sold to Syms in 2009, which resulted in some weird combination stores. But the new ownership wasn't enough. Filene's Basement filed for bankruptcy in the fall of 2011, leaving a lot of, erm, running brides shocked and dismayed. Markdowns popped up two weeks later, and the liquidation sale ended earlier than expected. Their Union Square space was filled by Burlington Coat Factory, while DSW took over the Upper West Side spot.

It's clear that the subset of discount department store shoppers is not enough to sustain the business model of these companies, where they receive old-season or damaged merchandise from high-end designers and retailers to sell for a fraction of the price. But while Loehmann's, Daffy's, and Filene's Basement have hit rock bottom, others are not just surviving—they're thriving, mostly in the outer boroughs.

Image via NYC GO

Century21 already has several Manhattan locations, and in 2015 they'll be open at Brookyln's Fulton Street Mall. Nordstrom Rack will be opening there as well, in addition to its current Union Square location and planned stores in East New York and the recently confirmed Flushing, Queens location. And it was just announced today that Neiman Marcus Last Call will open its first NYC store in Downtown Brooklyn.

Though it's difficult to tell why one discount department store is succeeding over another, maybe it has something to do with the name backing the brand. The regular Nordstrom, though it doesn't specialize in discounts, is a trusted retailer that has endured throughout the years. Same goes for Neiman Marcus. But that still leaves Century21 as a mystery.

But just because they're here for now doesn't mean they'll be here forever. Opening new locations is just a sign, not a confirmation, that they're still profitable. Let's hope they stay around for the steals and deals New York bargain hunters live for.
· Are Loehmann's Liquidation Prices Actually Cheaper? [Racked NY]
· Loehmann's Online Store is Already Down for the Count [Racked NY]
· Loehmann's Set to Shutter in March; Until Then, Hit Up the Sales [Racked NY]