9 Companies that went out of business because they didn’t innovate
Blockbuster declared bankruptcy in 2010, but the company’s demise was 10 years in the making. In 2000, Netflix CEO Reed Hastins met with Blockbuster CEO John Antioco to propose a partnership. Hastins had the idea that Netflix would be Blockbuster’s “online” brand. Antioco declined the partnership and the rest is history. Neflix is now worth $29 billion dollars, more than what Blockbuster was ever worth.
Neflix’s business model is centered on the happy customer. Their subscription-based business allows customers to rent movies and keep them as long as they want. Once the movie is returned, the next movie in the customer’s queue is sent. The best part? No late fees. Blockbuster’s revenue model was built upon penalties, such as high late fees, and impulsive purchases, such as overpriced snacks and toys near checkout.
For years, Borders was the nation’s second largest bookstore chain. Things started to go downhill in the 1990s when reading started to go digital. Their largest competitor, Barnes & Noble, started pulling away from CD and DVD sales, but Borders made the mistake of increasing their focus on these declining products.
In the early 2000’s, Amazon and Barnes & Noble started offering online purchases, while Borders fell short. In 2007, Amazon released the Kindle. Barnes & Noble realized they had to act quickly and sooncreated the Nook. Once again, Borders didn’t take the technological step forward and eventually fell into the category of companies that went bankrupt.
Like most things in life, fashion changes. While fashion does tend to go in cycles, many clothing trends from one time period don’t transfer to the next. In the 1980’s and 1990’s, Merry-Go-Round was upper class chic. They focused on bright colors and crazy patterns. A simple rayon shirt was sold for up to $100. Grunge was introduced in the 90s, and pastels were no longer “in.” Since Merry-Go-Round did not adjust their style to incorporate the latest fashion trends, their 536 stores gradually vanished and went bankrupt.
The DeLorean is known as the car from the famous movie series, Back to the Future. The movies created plenty of advertising for the DMC-12 but the car itself was lacking in many categories. The DMC was supposed to be the sports car of the future, yet it took over 10 seconds to go from 0-60. A little embarrassing for a so-called “sports car.”
While it had the hip gull winged doors, it was impractical for parking. The body of the car was stainless steel which was extremely heavy, showed fingerprints and couldn’t be painted. The cons significantly outweighed the pros, and the DeLorean was nothing but a memory by the end of 1982.
5. White Tower
Sounds like White Castle, right? This ultimate copycat emerged in 1926, five years after White Castle. White Tower got very creative by creating an almost identical look to White Castle. They copied the architecture of the building, the look of the burger, and even their slogan.
White Tower peaked with 230 stores in urban areas ranging from Milwaukee to Washington DC. Eventually White Castle sued White Tower for unfair competition, and obviously won the case. As a result, White Tower changed their look and stuck around declining urban areas, avoiding expansion. Slowly the restaurant chain started to fade and close its last store in 2004.
Founded in 1897, Oldsmobile is one of the oldest car brands. The brand was owned by GM and had success up until the end of the 1980’s. In the early 1990’s, the demand for mid-sized, mid-priced cars as slowly being replaced by minivans, SUVs, and sports cars.
GM decided that they would end production of Oldsmobile in 2004 due to the gradual losses over the years. The last car they produced was the Alero. This car happened to be my best friend’s 16th birthday gift. Back then, I didn’t know I would be co-driving history.
7. Wang Laboratories
Founded in 1951, Wang Laboratories was one of the most successful computer programming companies in history. At one point, they employed over 30,000 people and had annual revenues of $3 billion. Wang started with the development of calculators and finally moved into producing mini-computers. They eventually tried to compete with IBM by selling computers.
When the personal computer was introduced, Wang Laboratories didn’t stand a chance since the demand for word processing-only systems no longer existed. The following years were full of poor investments and misdirection that lead to its 1992 bankruptcy
8. Levitz Furniture
Founded in 1910, Levitz was one of the top furniture stores for decades and helped create one of the first furniture warehouses. In the 1990s, consumer preferences shifted toward a showroom style. This is when a customer comes to a store to see how the furniture would look in a real home (think IKEA). Since Levitz did not innovate, sales started to decline. The company ultimately went bankrupt in 2008.
The Reader’s Digest magazine was founded in 1922 and was one of the most read magazines in the United States. The magazine was categorized as a family magazine (published monthly) full of samples of favorite articles that were published that month.
Like Borders, Reader’s Digest was unable to go digital even as demand for printed magazines decreased. The company filed for bankruptcy for the second time in 2013.
Here are 7 other companies that went out of business over the years because they didn’t innovate.
- Montgomery Ward
- Readers Digest
- Filenes Basement
- Pacific Gas and Electric
- Eastern Airlines
- Paine Webber
- Burger Chef