San Francisco's Retail Scene

[peanut gallery]

First the bad news. From SFGate:

Clothier Wilkes Bashford to lay off 18 workers
Phillip Matier, Andrew Ross
Wednesday, February 4, 2009

Wilkes Bashford, the Sutter Street clothier who set the style for a generation of San Francisco's movers and shakers, has become the victim of the town's latest fashion trend - layoffs.

Slumping sales have led Bashford to let 18 of his 97 employees go.

"Things are tight, there is no question about it," Bashford said Tuesday before heading out to his daily lunch at Le Central, where he frequently dines with his best customer, Willie Brown.

Can't say we didn't see the layoffs coming. Bashford, whose stores in San Francisco, Palo Alto, Mill Valley and Carmel specialize in suits that run as high as $4,000, sent out a letter to shoppers in October offering a $300 discount on purchases of $800.

Then the stupid news, from the same article above:

Apparel in peril: Times are tough, but not so tough that San Francisco can't reject new businesses - even politically correct ones.

American Apparel, the U.S. clothing outfit that pays its work force, mostly immigrant Latinos and Asian Americans, twice the federal minimum wage - plus health care and other benefits - is just too much of a chain operation for San Francisco's hip Mission District.

A year ago, American Apparel, which already has three stores in San Francisco, leased a storefront on Valencia Street near 20th Street. Public notices of the store's planned opening went up three weeks ago, and quick as a zipper, neighbors and community activists hit the phones and spammed the blogosphere with howls that American Apparel would destroy the edgy, boutique quality of their neighborhood.

"Valencia Street is a great experiment and a fragile and cool thing - and we don't want to blow it," said neighborhood showman and one-time mayoral candidate Chicken John.

Supervisor Bevan Dufty, whose district includes the store site, says he hasn't taken an official position on the battle because he doesn't want to be disqualified from voting on the permit should Thursday's Planning Commission vote be appealed to the board.

Dufty did, however, underscore his general support for the city's limits on chain stores, noting that his office has received 250 letters and e-mails opposed to American Apparel on Valencia, and just five in support.

Company spokesman Ryan Holiday said, "A lot of people say they really want us, and a lot say they hate us and want us to go back to L.A. with our immigrant employees."

Although the company recently sold anti-Proposition 8 "Legalize Gay" T-shirts, Dufty and others say this fight isn't about the company ethos.

Explains Dufty: "They are just saying it's not right for Valencia Street."

A street that the Planning Commission lists as having 24 vacant storefronts.

Read that last line again. I prefer (and try to support) small, local shops over chains whenever possible. But with so much vacancy and an economy in the dumper, this is nuts.

And finally, the worst news, also from SFGate:

Elephant Pharm abruptly closes its stores
Victoria Colliver, Chronicle Staff Writer
Wednesday, February 4, 2009

Elephant Pharm, a small Bay Area drugstore chain known for its holistic approach to health remedies, abruptly closed all three stores on Tuesday and announced plans to file for bankruptcy.

Based in Berkeley with stores also in Walnut Creek and San Rafael, Elephant Pharm employed a total of about 190 people, including at its home office. A Los Altos location, which opened about two years ago, closed in the fall.

The company, which offered traditional prescriptions along with Chinese herbs, yoga supplies and other alternative products, cited the downturn in the economy for its decision to liquidate under Chapter 7 of the U.S. Bankruptcy Code.

"The company has been burdened with obligations that were quite difficult for a company of our size to carry," Elephant Pharm's chief executive officer, Kathi Lentzsch, said in a statement.

Over the past year, Elephant Pharm continued discussions with potential investors, cut costs and closed the Los Altos store in an unsuccessful effort to avoid Tuesday's decision, the company said.

"The current management team and board of directors worked diligently to grow the company to a size that could bear these obligations," Lentzsch said, "but due to the current economic conditions and the tightening of the credit market, it has not been possible to raise the capital required to continue the business."

Elephant Pharm, which opened its first store in Berkeley in 2002, was founded by self-described serial entrepreneur Stuart Skorman, who also started Reel.com and the now defunct Hungryminds.com at the height of the dot-com boom. In 2005, Lentzsch took over as CEO from Skorman, who is no longer involved in the company.

In the fall of 2005, the company raised $26 million from Tudor Investment and the Bay Area Equity Funds. Giant drugstore chain CVS also has invested in Elephant Pharm.

Customer Keith Gatto made a pilgrimage to Elephant Pharm's Berkeley store Tuesday from his office on the UC Berkeley campus because he couldn't believe it was closing.

"The feel I got from Elephant Pharmacy was that they were looking out for you and your health. It wasn't a transaction-based environment," said Gatto, 44, who appreciated the company's support of both Western and alternative therapies.

Jude Valentine, a Berkeley resident, said she wasn't surprised by the store's closure because she noticed recently that the store's shelves were emptier and some products were out of stock.

"What was great about that place was there were consultants that anyone could see - reputable people with credentials," said Valentine, 72. "A lot of times you could see one of their practitioners before you could get an appointment to see your doctor."

Valentine, who did not know where she would take her pharmacy business, said she attended the store's wellness classes and considered it a community center. "And you could get a prescription filled, by the way," she said.

The president of Elephant Pharm's chief competitor, Pharmaca Integrative Pharmacy, said he was sorry to see Elephant Pharm go out of business.

"You always want competition in your space because it keeps you on your toes and lends credibility to the model," said Mark Panzer of the Boulder, Colo., company. Pharmaca has 23 stores in five states including 13 in California.

But Panzer didn't think Elephant Pharm's troubles signaled similar problems for his company. "Our execution - complementary, alternative medicine coupled with traditional pharmacy - has been a model that resonates with our customers," he said, adding that the stores continue to show positive sales growth.

On Elephant Pharm's Web site, the company left this message to its customers: "It's been a very special six years since we started this drugstore revolution, and we certainly couldn't have made it as far as we did without you - our customers. We hope that you will continue your pursuit of a good, long life, well lived."

My wife was in the San Rafael store just a few days ago and noticed the shelves were strangely bare. She asked if they were closing and the employee said no, they were just late in getting shipments. They might have been just saying that, but my guess is the employees didn't know this was coming either. We can get our prescriptions at other places, but they sold a lot of unique stuff we haven't found elsewhere.