Dorchester loses two discount department stores, leaving a gaping hole behind
The prices this week at Fallas department store in Dorchester’s Fields Corner neighborhood are extraordinary, even for a discount retailer: Boys polo shirts are two for $3. Women’s slip-on sneakers are $7.99 a pair. And dump truck and train toys are now half off at $6, just in time for Christmas.
But the shoppers who wandered the aisles weren’t celebrating as they scored their holiday deals. The Fallas store is closing at the end of December. It’s the second discount store in the neighborhood to string “going out of business” banners across its facade in the past month. The other, an 80,000-square-foot off-price megastore, National Wholesale Liquidators on Morrissey Boulevard, pulled its security gates down permanently last week.
The store closings have come as a shock to local residents, as both stores were performing well and had loyal customers. But the parent companies of both chains are now restructuring as they face bankruptcy proceedings. National Stores Inc., the California-based company that owns Fallas, announced it was closing 184 stores across the country this fall. And National Wholesale Liquidators Inc., which is based in West Hempstead, N.Y., announced its own liquidation proceedings in October. Sixty-one employees lost their jobs in the Dorchester store, according to state filings.
The closings were a double whammy for Anngolia Rice. She lost her part-time job at National Wholesale Liquidators when the store closed, and she’s a frequent customer at Fallas.
“A lot of people that do live in this neighborhood need stores like this,” she said as she browsed a rack of jeans in Fallas earlier this week. She said she visits the store regularly to pick up sheets, housewares, and toys for her family.
And with 24 nieces and nephews, she has a lot of stockings to stuff this holiday season.
“It’s crazy, because now we don’t have anything to look forward to with this place being gone,” she said. “All the other stores are expensive.”
An empty storefront can be a Rorschach test in a rapidly changing neighborhood. When news of the closings broke on Twitter, realtors wondered if a Trader Joe’s might slot itself into the empty Fallas space.
And a Dorchester Reporter editorial envisioned a mixed-use development on Morrissey Boulevard, and proposed a new MBTA station, which it said could “transform this part of the neighborhood that is thirsty for alternative transit options and renewed commercial development.” With the South Bay shopping center’s recent addition of new retail and housing, and the mixed-use Dot Block complex breaking ground in Glover’s Corner, pro-development advocates are hoping for the same type of commercial infusion that has come to other redeveloped pockets of the city.
But the rapid succession of discount store closures also has many residents concerned about what stores might come to fill in those gaps, and whether they’ll continue to offer affordable options for the working-class and low-income families who live nearby.
“It’s going to affect the neighbors,” said Cora Foster, who was shopping at Fallas on Tuesday morning. “Christmas is coming, and they can’t afford the higher ticket items.”
With online sales skyrocketing, retailers of all stripes have experienced tumultuous times, and store closings have become as familiar to shoppers as Labor Day sales. But discount and off-price retailers have managed to maintain an edge, as reflected in the soaring stock prices and rapid growth of retailers like Dollar General and the TJX Cos. And economists are finding that lower-income shoppers are demonstrating more consumer confidence this holiday season, thanks to the strong job market and lower gas prices.
But even those who cater to the lowest end of the discount spectrum — serving low-income shoppers for whom deals aren’t a fun surprise, but a necessity to make ends meet —still need a strong business model to survive, says Sucharita Kodali, a retail analyst with Forrester Research.
“The reason why some of these companies may be doing not as well is related to bad merchandising,” she said. “Yes, it can be cheap stuff, but there’s a lot of cheap stuff out there these days. You can get very affordable on-trend merchandise at Target and Kohl’s, and you can get all of your cleaning supplies in Dollar General.”
Some low-end retailers are losing ground to Target and other aesthetics-conscious competitors because their stores are “not that appealing of an environment,” she said.
And low-income shoppers are increasingly finding deals online and shopping with their mobile phones. According to a Forrester research report, around 57 percent of online consumers with a household income of $35,000 or less made online purchases in the past three months.
That’s forced many discount retailers into evolving digitally as well, said Katherine Cullen, the director of industry and consumer insights for the National Retail Federation. The Dollar General and Family Dollar chains recently launched mobile apps, and the website Hollar is attempting to become the dollar store of the Web.
“They recognize that consumers’ expectations are changing, whether they’re shopping at discount or full-price stores,” Cullen said. “They’re looking ahead at how the consumer is changing and anticipating that.”
So there’s a strong likelihood that more financially solvent discount chains will take interest in the empty storefronts in Dorchester, said Scott Hoyt, who tracks consumer behavior for Moody’s Analytics.
“The fundamentals for the lower-end consumer right now are probably as good as they’ve been since before the financial crisis,” he said, citing the strong labor market as a major driver of consumer spending within that income bracket.
That’s made discount retailers desperate to undercut each others’ prices, he said.
“The competition is so intense, and their pricing power is weak,” he said. “If you’re not a leader in your area, you’re in trouble.”
There’s no word yet on what stores might bid to become Dorchester’s next discount leaders. Jennifer Maisch, a spokeswoman from Kimco Realty, which leases the National Wholesale Liquidators site, said the company is “exploring a lot of different options” and wouldn’t be opposed to breaking up the 80,000-square-foot space to accommodate multiple stores. She said there haven’t yet been discussions to redevelop the site.
And Tom Cifrino, the owner of the Field’s Corner shopping center, said he purchased the lease back from the owners of the Fallas space in bankruptcy court after watching a string of retailers try, and fail, to stay afloat in the space over the last decade. “I wanted to control,” he said. “I didn’t want a fly-by-night discount store.”
He says he has no plans to redevelop the shopping center, as many of its tenants have long-term leases, and he’s now entertaining offers from three national retailers who are interested in the 30,000-square-foot site. With a major buildout, he anticipates a new store should open in the plaza in 2020.
“We’re trying to make the overall shopping center better, and it will take time to do it right,” he said. “If you don’t do it right, it’s going to fail again.”