A decade after it was founded by then 22-year-old Sophia Amoruso in 2006, Nasty Gal filed for bankruptcy in November.
"Filing for bankruptcy is actually the most responsible decision for the business," Amoruso said at an event in Sydney, Australia when the news broke, the Independent reported.
The trendy fashion retailer had been through some tumultuous times in recent years. Amoruso stepped down as CEO in 2015. In her absence, the retailer laid off employees and former workers complained of a toxic environment.
After declaring bankruptcy, the retailer announced it would close 154 stores in the US and Canada.
"Back in the day, all of the cool kids had trendy brand names plastered across the front (or back) of their clothing. The trend has changed, and style today, perhaps encouraged by social media, embraces individualism and uniqueness," wrote Nicholas Rossolillo in finance publication The Motley Fool. "Online ordering and heavy discounting have also taken a toll on the industry, especially mall-based retailers. Aeropostale simply hasn't been able to adapt."
Kate Spade's sales have suffered in 2016 as tourists' visits declined and discounting grew more popular, making it harder to sell items at full-price.
"We have become increasingly frustrated by management's inability to achieve profit margins comparable to industry peers," Caerus' founder, Ward Davis, and managing partner, Brian Agnew, wrote.
Discover More Like This
BACK TO SLIDE
It's not like people weren't spending money over the holidays.
In fact, overall holiday spending rose 4% in the US to $658.3 billion, compared to last year, according to the NRF. That number includes$122.9 billion in online sales, which jumped 12.6% over last year.
This highlights a big problem in retail: many department stores and big-box retailers are still primarily reliant on in-store sales for revenue, when all the holiday spending growth is happening online.
Take Target for example: in the months of November and December, Target's same-store sales fell 3%, while online sales soared more than 30%. But Target's ecommerce sales are still only a fraction of its overall sales, so the growth online couldn't offset the losses in stores. As a result, overall comparable sales — including online and in stores — fell 1.7%.
That's why so many retailers are now announcing store closures in the wake of the holiday period. They need to cut their losses on unprofitable stores — or even marginally profitable stores — and invest more in growing their ecommerce businesses.
"Department store fundamentals continue to materially erode," Morgan Stanley analysts wrote in a recent note. Specialty apparel retailers like Gap and Abercrombie & Fitch are also in trouble, they wrote.
"Long lead times for most make it difficult to read and react to sales trends in season and causes these retailers to be more susceptible to fashion mistakes," the analysts wrote. "Merchandise and brand differentiation is tough to come by and is becoming increasingly difficult to defend share against Amazon."
Off-price retailers like TJ Maxx offer an added threat with their deep discounts that undercut Macy's, Target, and others on price.
"As millennials come to comprise the largest segment of the population, we expect these 'original bargain hunters,' forged by coming of age during the Great Recession, to remain value-focused, driving future apparel pricing pressure," analysts wrote.
The result of these pressures will drastically alter the retail landscape over the next several years. Physical stores won't completely disappear, but they will continue to decline in number as retailers race to catch up to Amazon and adapt to customers' changing shopping habits.