Why are shuttered retailers’ Web sites still open for business?
Raised from oblivion by their new owners, undead stores continue to haunt the Internet
Circuit City. Linens ’N Things. Bombay Co. They’re all out of business, their stores shuttered, many employees laid off.
But according to their old Web sites, they’re all still selling, or planning to sell, the same stuff they always did — everything from digital picture frames to leopard-print rugs.
How can this be? Didn’t these companies shut down?
Here are some questions and answers about these phantom retailers.
Q: What are the old sites of out-of-business store chains doing?
A: Electronics retailer Circuit City, which closed down the last of its 567 stores in March, is one of the most prominent names that’s gone under. Online retailer Systemax Inc. bought the Circuit City brand and Web site, http:// www.circuitcity.com , in May. The company sells the same types of products that Circuit City did, like flat-panel televisions, computers and the Nintendo Wii, and says on its site it offers a wider selection than Circuit City had in its stores or online. The Linens ’N Things brand also is still selling. The home goods retailer went out of business this past winter and in February a company called LNT Acquisition LLC bought the Web site LNT.com and the Linens ’N Things brand name, according to the Web site.
Gadget retailer The Sharper Image, which filed for bankruptcy protection in February 2008 and has closed all of its stores, lives on as a brand, not a retailer. Visitors to its site,
http:// www.sharperimage.com , are pointed to retailers like OfficeMax, Bed Bath & Beyond, and Macy’s, where Sharper Image products — like massage chairs and weather clocks — are sold. But this isn’t the old Sharper Image company. The remaining assets are owned by a joint venture formed between Hilco Consumer Capital, Gordon Brothers and Bluestar Alliance, while The Sharper Image brand name is licensed to manufacturers and distributors.
Q: So the company dies, but the name survives. How does this happen?
A: Like an unused cash register or unsold merchandise, companies buy up the names in bankruptcy, often for very little money. In the case of Circuit City, Systemax bought the fallen company’s trademarks, domain names, customer lists and other information related to the online business for $14 million in cash plus a share of future revenue over 30 months.
Companies in bankruptcy protection want to come up with as much money as they can, so they’ll take whatever they can get for their assets.
Q: Can consumers trust these new phantom retailers?
A: They need to do research and look at policies for returns and warranties, since they may not be the same as under the old ownership, said Edgar Dworsky, a consumer advocate and founder of Consumer- World.Org, based in Somerville, Mass. Companies aren’t required to say on these sites how the ownership has changed, though he said they sometimes do in fine print, like a link on Circuit City’s main page saying it is under new ownership.
The bottom line? Don’t assume it’s business as usual.
“It’s very easy for consumers to be misled,” he said. “They may have a very positive image of a famous brand that they’ve known for years and all of a sudden somebody else is really behind that brand, with or without the same quality and policies.
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