The Linens ’n Things brand has gotten quite a bit of attention over the past year and a half or so. From the moment it filed for bankruptcy protection back in May 2008, through its subsequent liquidation when it was unable to drum up the new credit needed to reorganize, the chain has been cited in scores, if not hundreds, of reports about the ailing economy. The last of its 589 stores shut its doors in January (earning Linens ’n Things mentions in articles about vacant retail space). Then, on May 12, the brand that had become practically synonymous with the recession returned. Sort of.
In the liquidation version of bankruptcy, every possible asset of a failed firm, from office chairs to intellectual property, is sold off to pay creditors (who end up with pennies on the dollar just the same). In this instance, control of the Linens ’n Things brand, meaning its trademarks and the like, and its Web site, were acquired for a reported $1 million by a joint venture between Gordon Brothers Brands and Hilco Consumer Capital, divisions of firms with long histories in the bankruptcy business. This entity helped run the Linens ’n Things liquidation, spending four or five months immersed in its unwinding operations in the process. “We learned a lot about the brand and the consumer,” Carlyle Coutinho, vice president of Hilco Consumer Capital, says. “We knew we’d have a very strong e-mail list and a very strong customer base that was very loyal.”
Time will tell how loyal shoppers turn out to be to what the Gordon Brothers-Hilco crew concocted: a Web-only version of Linens ’n Things. But a database of five million e-mail addresses isn’t a bad thing for a “new” business to have at its disposal, and certainly not something an online retailer starting from scratch would be likely to have. Nor would a start-up have a nationally recognized name the day it opened. The Gordon Brothers-Hilco partnership has also picked the Polaroid and Sharper Image brands, among others, from the rubble of bankruptcies. Their idea isn’t to revive these companies or build new and innovative traditional businesses. The proposition of this distinctly Great Recession model is snapping up a valuable asset on the cheap and using the low-labor tools of Web commerce — outsourcing, electronic ordering, etc. — to simulate a version of the original business.
The new version of lnt.com that celebrated its “grand reopening” a few months ago may not strike the typical shopper as anything radical. The interesting stuff is in what’s behind the site, or maybe even what isn’t. For instance, the actual operation of lnt.com has been jobbed out to a third party: a San Diego firm called TorreyCommerce that bills itself as “a leading provider of outsourced e-commerce to the home-furnishings industry.” (It also runs shopping sites like BeddingStyle.com and the online stores associated with Better Homes and Gardens and Country Living magazines.) Linens ’n Things itself now has few direct employees, or even a full-time chief executive. And while the comeback announcement included a mention of plans to “reinvigorate” the brand, the marketing efforts so far revolve around Internet search ads and promotions sent to the e-mail list.
One change is the breadth of goods on offer through the new site, which has been greatly expanded over what the old physical-world retailer sold: certain Vera Wang and Tommy Bahama home and bath products, kitchen tools from Oxo and so on. There are also whole new sections for babies and for pets, categories that weren’t part of the old chain’s mix. According to Tim Shilling, a Gordon Brothers director, two of the three top-selling items on the site are new additions: a comforter set from a brand called City Scene and a Bugaboo stroller.
In 2007, its new owners point out, Linens ’n Things had sales of around $2.8 billion. That represents an awful lot of people who, at the least, liked the chain enough to spend money there. And while it seems extremely unlikely that lnt.com will match that sales figure, it doesn’t have to. The new version of the company has virtually no real estate costs, and of course has no obligation to pay its predecessor’s debts. (Indeed, you can’t even use an old Linens ’n Things gift card at the new online store.) Craig Venezia, another Gordon Brothers director, mentions potential future deals that might put the Linens ’n Things name on private-label products sold by other retailers, or store-within-a-store sections on the model of Sephora in some J. C. Penney locations.
And perhaps that will happen. But for now the idea is a combination of a recognizable name, a clean financial slate and minimal overhead. “Think about where the world is moving today,” Venezia says. “The economy is cleansing business right now.” The new Linens ’n Things, he argues, is a model of efficiency, offering competitive prices and freeing business from the cumbersome liabilities that come with big-box leases, pricey brand-building campaigns — or a work force. “It really reflects,” he says, “where the world is going.”
Alan Davidson is the founder of ThroughYourBody.com and the author Body Brilliance: Mastering Your Five Vital Intelligences, the #1 bestselling Health & Welness book and winner of two National Book-of-the-Year awards.
Alan is also the author of the Free report “Body Breakthroughs for Life Breakthroughs: How to Peak Your Physical, Emotional, Mental, Moral, and Spiritual IQs for a Sensational Life” available at www.throughyourbody.com
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