Wharton’s Cait Lamberton breaks down the demise of fabric and crafts chain Joann and why it’s so challenging for legacy brands to stay solvent.
Plagued by weak sales and eroding market share, Joann fabric and crafts is the latest legacy brand to go out of business. All 800 stores are closing after the company was unable to emerge from a second bankruptcy filing in less than a year.
Joann joins Foot Locker, Party City, Big Lots, Family Dollar, Express, CVS Health, Macy’s, and many others that have shuttered or shrunken their footprint in the last year amid what Wharton marketing professor Cait Lamberton describes as an extremely challenging time for retail.
“Retail is tough, but what Joann does is even tougher,” she said during an interview with Wharton Business Daily. (Listen to the podcast.) “They had a lot of things working against them that made it particularly tough for them to stay alive.”
Why Are Joann Stores Closing?
For 80 years, the Ohio-based chain served a loyal customer base of sewers, quilters, crafters, and DIY enthusiasts. But in recent years, it struggled with competition from other brick-and-mortar stores, including Hobby Lobby and Michaels, and online sales. In March 2024, the publicly traded company filed for bankruptcy to reduce debt and return to private ownership. It declared bankruptcy again in January, and in February announced it would close 500 stores.
Lamberton said Joann’s troubles are somewhat by design. The stores are forced to carry massive inventory because crafty customers want variety — and providing that is expensive.
“It matters if they get rid of a velvet or a lace or a tie dye, because for somebody, that’s the thing they wanted,” she said. “They need enormous amounts of space, enormous amounts of inventory, and they’re often located in areas that have been seeing declines in foot traffic.”
The liquidation sales in stores and online will help the company squeeze as much money out of the remaining inventory as possible. Lamberton noted a bit of irony in the going-out-of-business sale, which was announced Feb. 15. Shopify reported that demand skyrocketed, with sales of quilting thread up 200%, craft cutters up 88%, and straight pins up 87%.
“It’s not that the demand isn’t there. I think it’s just their cost structure and the nature of the business itself made it very hard to survive right now,” the professor said.
Retailers Hit with Headwinds
Shoppers will be able to buy online until liquidation sales are concluded, but it’s unclear whether Joann will transition permanently to digital. It’s a tricky proposition, Lamberton said, with few retailers able to get it right. She pointed to Bed Bath & Beyond, which closed in 2023 and was resurrected online after being acquired by Overstock.com.
“They took the brand equity of Bed Bath & Beyond and the online expertise of Overstock, and they were able to successfully emerge from a bankruptcy,” she said.
Retail has always been tough, Lamberton said, but there are new pressures that threaten legacy brands and older companies. The biggest threat comes from online sellers, and not just the well-known competitors that established brands are used to dealing with. There are fakes, dupes, and a plethora of what she calls ephemeral brands that sell through social media.
“At one point, there was an idea that you would want to buy an established brand and that was the signature of quality. Now, there’s more of a cache for a brand that’s going to be gone in a minute,” she said. “You have that thing that is of the moment, no one expects it to last, and I can buy it. I can click a button on my phone, and it’s coming to my house.”
Frictionless purchasing also poses a problem for physical stores that are now expected to offer a rich, immersive shopping experience to get customers off the couch.
“That’s a tough tightrope to walk,” Lamberton said.
Retail woes are only likely to continue. She said the latest consumer surveys show that worries over new tariffs have accelerated purchases, which means they have stocked up on items they may have intended to purchase later. Any shift in consumer behavior alters the bottom line for retailers.
“The other question, of course, is how people are going to respond to those price increases that are likely to come,” she said.
