Failure is a chance to learn and we can learn something important from the end of fashion retailer Dots

As yet another fashion retailer in America declares bankruptcy and goes into liquidation, we can take a look at the lessons to be learned from their demise.

Not long ago, I wrote about the end of the discount fashion retailer Loehmann’s, which is currently holding a liquidation sale before closing. Loehmann’s started life as a discount fashion retailer which bought overstock lots from larger companies and sold them at a discount. The chain was quite successful for many years, opening locations across the United States. However, poor management decisions and competition from online stores spelled the end of Loehmann’s.

The rise and fall of Loehmann’s taught us about how to build a company by taking advantage of cheap overstock lots, as well as the dangers of failing to adapt to a changing market. Now, another US fashion retailer is shutting its doors, with a new set of lessons to teach us.

This time, the unfortunate fashion retailer is the women’s discount clothing chain Dots. Founded in Cleveland, Ohio in 1987, Dots built a following by offering name-brand women’s clothing at low prices. Just as Loehmann’s had, Dots found overstock and excess merchandise, bought it incredibly cheaply, and passed that savings on to the customer. And for many years, the business model worked.

However, over the past few years Dots has been the victim of a steady decline. This January, the company declared bankruptcy and claimed that it was working to restructure in order to continue operations and find a way to turn a profit.

It soon became clear that despite the best efforts of management, Dots no longer has a future. Recently, the New York-based liquidation firm Gordon Brothers has announced that it will be overseeing the Dots liquidation sale. All 360 locations across the country will close, as will the headquarters and warehouse.

Some of the reasons cited for the closure include a problematic system with leasing contracts, poor decisions regarding buying and merchandise selection, and the oft-repeated reason of increased competition from online fashion retailers and larger chains. And undoubtedly, those reasons are certainly some of the most immediate factors leading to Dots’ bankruptcy.

That being said, retail consultant Robert Antall had a different perspective when asked about the closure by the Cleveland Plain Dealer newspaper. He sees the departure of company founder Bob Glick as the root cause of Dots decline and eventual failure.

He goes on to state that retail, especially fashion retailers, are really the business of entrepreneurs with strong visions, and when those entrepreneurs leave, the company is often left without an identity. This is especially bad in retail, as the founder’s vision is what connects with customers, and often times the customers don’t feel comfortable with differences in selection once new people take charge.

Not only that, but I personally feel that every business, not just retail businesses, should have a strong vision for what the company is, and what it does. Only when a business, and everyone working in that business, knows exactly what it’s doing will it thrive. That way, even if the owner, founder, or CEO leaves, the company can go on without that person.

Unfortunately for Dots, they didn’t have that kind of strong vision in place that is separate from the ownership. But hopefully other businesses will learn from this mistake.

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