Inventory Management, Lack of Ecommerce, Killed Building 19

building-19-300The irony of New England off-price closeout retailer Building 19’s demise is that it started off in 1964 as a merchant that took advantage of other merchant’s misfortunes and failures.

But as Building 19 expanded its bricks-and-mortar footprint, its business plan remained in a time warp. Company co-founder Jerry Ellis admitted to Boston Herald that the rise of ecommerce shopping helped do his company in. But in the same article, Mike Tesler points out that the lack of a sophisticated inventory management system also doomed the merchant.

The result? Building 19 had to file for Chapter 11 bankruptcy protection, and hired Gordon Brothers to liquidate the 10 remaining locations. According to The Herald, court documents estimate Building 19’s debt to be between $50 million and $100 million. That’s an awful lot for a 10 store bricks-and-mortar chain.

Bill Elovitz, who runs his 86-year-old father’s business, is hoping Building 19 can rebuild. Maybe with an efficient inventory management system, it ca become an ecommerce superstar? Maybe Building 19’s bricks-and-mortar footprint can be consolidated, and ship-from-store technology can help it broaden its reach beyond New England households?

Or maybe Building 19 can have success in the marketplaces? In the early 2000s, when aspiring sellers were trying to make a buck on eBay, I won several auctions that contained the gooey remnants of Building 19 price tags. So I know first-hand that people were making a buck via Building 19’s good fortunes.

Technology has allowed closeout and off-price merchants to compete online. For example, SteinMart launched its own ecommerce site in September. And TJX announced in August that it was going to expand its offerings to ecommerce as well.

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