Another Brick & Mortar Retailer Bites the Dust: Lucy’s Merges with The North Face

Citing growth in competition, Lucy Activewear has announced that it will close all stores by early 2018 with most of its 44 stores remaining open through fall 2017. Founded by former Nike executives, Lucy was a relatively early entrant in the emerging athleisure market that was later defined by competitors like Lululemon. The women’s athleisure market is intense, with existing brands, newcomers and established brands branching out into athletic wear, all competing for a share of consumer’s dollars.

Lucy will discontinue retail and merge with The North Face, both of which are owned by parent company VF. A decision has not yet been made on whether or not Lucy will keep its branding.

Given that the athleisure market is growing, with an estimated market size of $44 billion in the U.S. alone, according to research firm NPD Group, it’s curious what led to Lucy’s demise. Successful retailers like Under Armour, Athleta and Lululemon Athletica have encouraged everyone from Louis Vuitton to the Gap, Tory Burch to H&M and even Wal-Mart and Target to enter the market. Even gyms and fitness companies like Soul Cycle are creating their own clothing lines and companies like Adidas are promoting collaborations with celebrities Kanye West and Stella McCartney. So while the market is booming, it’s possible that it is nearing saturation from too much competition, making it harder than ever for brands to stand out. Recent bankruptcy filings from Sport Chalet, Sports Authority, Pacific Sunwear, American Apparel and Quicksilver suggest the athletic wear market cannot sustain every retailer that does not have a defined edge. Retailers will have to keep adapting to find their position within the market. Having a clear message, focusing on demographics and winning on social media will help them differentiate from the competition.

Unfortunately, Lucy’s is not the only retailer to suffer declining sales at retail stores. J.C. Penney, Macy’s, Sears, Kmart, CVS and The Limited have all recently announced significant store closures in recent weeks.  We believe we are amid an historic shake-out in brick and mortar retail.