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Retailer files bankruptcy as it hopes to reconnect with customers

Meeting customer expectations is a primary objective for any business. A retail chain that became popular by offering stylish women’s apparel and clothing recently discovered this fact firsthand. In recent years, Dots LLC changed its merchandise offerings from chic clothing to youthful fad pieces. This caused their most important demographic, young career-oriented women who wanted to look fashionable both in and out of the workplace, to stop shopping at their stores. Before this recent downturn the retailer had grown to over 400 stores nationwide, including locations here in Ohio.

Regaining a customer base once a business’ reputation has soured is not easy. Some suppliers for the retail chain stopped extending credit. Others imposed stricter credit terms. This is a difficult position for any business as reasonable credit policies are necessary in order to maintain sufficient inventory.

Bringing back a valuable customer base can involve a change in strategy, such as a new line of products or concentrating on the products that do sell. Some business owners may wish to offer private credit cards to preferred customers or institute a rewards program for loyal customers. However, these moves can be very difficult for small businesses, especially those operating in the red.

Attorneys for the retail chain have helped it to stay in business by filing a Chapter 11 bankruptcy petition. This has allowed the company to reject some of its non-profitable leases and cut expenses. It has also been able to secure $36 million from its senior lender to support the business while it goes through a reorganization plan.

Small business bankruptcy does not need to be the end of the road. Attorneys experienced in small business debt can often assist business owners with improving cash flow, business debt negotiations, and securing valuable assets.

Small business owners who have over-extended their resources, or who have fallen short of meeting customers’ expectations, may benefit from meeting with an attorney and looking into business reorganization. The key is to figure out how to turn a business into an asset instead of a liability.

Source: Crain’s Cleveland Business, “Bankruptcy Filing Puts Dot on the Spot,” Michelle Park Lazette, Feb. 2, 2014

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