Gordon Brothers Diversifies Strategies
New Chapter At Gordon Brothers
Anything But 11
By Mike Troy
Boston – When the Gordon Brothers name surfaces in the retail industry it often seems to be in a bankrupt retailer’s final press release to announce the firm was hired to liquidate inventory.
It is a reputation Gordon Brothers developed during its 100-year history, although it is one that no longer fits a company that is perhaps as well positioned in the retail industry as today’s most successful operators due to a diversification strategy undertaken two decades ago.
“We are well known for inventory dispositions and store closing sales and we are equally well known for real estate dispositions,” said Gordon Brothers CEO Michael Frieze. “However, a very substantial part of our business also is with successful retailers.”
Therein lies one of the company’s challenges. The successful retailers to whom Gordon Brothers provides a variety of services would rather Frieze not share their names because of the company’s reputation as a liquidator, yet the company can’t shake is reputation without talking about the work it does for successful companies.
Gordon Brothers may still be the company a bankrupt retailer turns to when it is time to liquidate, but it is also just as likely a profitable retailer will seek the services of one of the company’s other divisions.
“What we did was recognize that we wanted to be a broader-based services company,” Frieze said.
As a result, there is a GB Wholesale division that helps manufacturers and retailers sell through excess inventory by finding new buyers. GB Fixed Asset Solutions helps retailers raise capital by disposing of excess store fixtures and other equipment. The Gordon Brothers division known as DJM Asset Management leverages a network of retailers, landlords, brokers, developers and investors to provide real estate services. Other divisions include GB Asset Advisors, GB Palladin Capital Group, GB Retail Protective Services and GB International.
“Everything started from understanding values,” said Frieze.
Whether that is the value of merchandise that requires liquidation, store fixtures or the net present value of a lease, Gordon Brothers has evolved during the course of its 100-year history into a company retailers are just as likely to call when they are doing well as when it is time to liquidate merchandise. Along the way, the company has accumulated a massive database of information to help determine what different products, leases and fixtures are worth at different times of the year in different parts of the country.
In addition, Frieze, who has been with Gordon Brothers since 1966, has developed a unique perspective on the retail industry as someone who has seen the demise of many retailers.
“Retailers generally have a problem they know they should face, but they don’t face it very well,” Frieze said. Most don’t focus on their underperforming assets because Wall Street is always pushing for growth. As a result, every retailer, and Frieze emphasized every, has assets that are underperforming. “I don’t care whether you are growing or contracting, you should always be looking at your asset structure. That is one of the things we are good at is understanding the value assets can realize that are not performing,” Frieze said.
That is a main reason why Gordon Brothers is well positioned in the retail industry. Change is always taking place with certain companies and sectors on the rise while others wane.
“Wal-Mart is awesome in terms of how they attack the food retailing sector so there are going to be significant changes there,” Frieze said. “I certainly would have my eyes on that sector.”
Other concerns range from decreased mall traffic, too many stores and a lack of risk taking by retailers who don’t give customers a reason to shop their stores.
“There is not enough creativity in product development. Customers go in one store and they see the same merchandise they saw in the other stores,” Frieze said.
As for the future of retailing and the next generation of leaders, Frieze believes the industry faces challenges there as well.
“It is difficult to attract talent to retail, but it is one of the more exciting businesses around because the acceleration of change is massive,” Frieze said. “It is not a business on the surface that seems attractive, but if someone really wants to make a difference they can in retail.