Fred Segal, an iconic Los Angeles fashion retailer loved by celebrities over its 50 years of existence, announced the closure of its last two stores on Wednesday. Where it had once nine stores across the U.S., Asia and Europe, the company is closing up shop for good.
Jeff Lotman, the owner of brand licensing company Global Icons, purchased the company from Fred Segal’s nephew Ron Herman in 2019, just before the pandemic rocked the world and put immense financial pressure on Fred Segal. Still, Lotman had big plans for Fred Segal, hoping to open 20 new stores this year. In February, Fred Segal launched a new category, Fred Segal Home, developed by interior designers Keith Granet and Blair Carlton.
However, the pandemic’s pressures never let up, and when the business failed to recover, the company was forced to close its final stores.
Part of the issue, according to retail experts, is the innate pressure on retailers with a few number of stores and small scale to stay afloat without the support of scale.
“Retail, even on the best of days, is one of the most difficult businesses there is,” said Matt Voda, CEO of the marketing tech company OptiMine Software. Voda is also a retail advisor, working with companies like JCPenney and The RealReal. “It is only getting more complicated in today’s multi-channel environment where consumers have more options, choices and information than ever before. This puts enormous pressure on the retailer to keep costs low versus larger-scaled competitors and keep current with significant advances in technology and analytics that are now table stakes. As a tiny two-store retailer, Fred Segal had a lot going against it.”
In an interview with the Los Angeles Times, Lotman said one thing Fred Segal failed to do was establish a strong brand name of its own. It carried over 200 brands but rarely ventured into private label or created its own products.
“It’s easier than ever for customers to compare products online before they shop in-store.,” said retail strategist Jeanel Alvarado, CEO of Retailboss. “Pinterest is notorious for recommending ‘similar’ products for everything pinned on their social network, which means if you’re selling a striped sweater for $300, Pinterest has three other versions for $50, $100, and even $10 (if we include Shein). Retailers like Zara are getting ahead of this new shopping behavior, unlike Fred Segal, by shifting the focus back onto the products and how it fits into your lifestyle.”
Fred Segal joins a number of other fashion brands and retailers that have closed their doors in recent months, including The Vampire’s Wife, Ted Baker and, most recently, luxury fashion reseller Dora Maar.
“Brick and mortar retail continues to be fragile in the post-pandemic era,” said Scott Stuart, retail expert and CEO of corporate restructuring organization Turnaround Management Association. “It is still a wait-and-see environment as retailers with marquis brand power look to find ways to be re-invigorated as the recent Saks-Neiman merger is hoping to ignite, using the tech power of Amazon and Salesforce behind it, in a new twist on the continuing saga that is high retail drama.”
