Many brands vanish in shrinking economy

NEW YORK - Shoppers won't be picking up ornate lamps from the Bombay Co. in the coming year. Or investing with Lehman Brothers and Bear Stearns. No flying to Hawaii on Aloha Airlines or buying cheap tickets on Skybus, either.

All those names vanished in 2008, victims of the economy, the financial meltdown or other reasons. Experts say 2009 could mark the end of even more well-known brands as the now-yearlong recession puts more struggling companies on life support.

"I think 2009 is going to be a bloodbath," said Scott Testa, a marketing professor at St. Joseph's University in Philadelphia. "I think it's going to be very, very ugly."

For some companies, 2008 was no beauty. The woes of the nation's retailers began before the year even started. Bombay Co., known for its home accessories and furnishings, succumbed to slow sales -- an ailment that hurt other companies as the economic downturn turned into a recession.

The casualties weren't limited to retail. Travelers also bid adieu to some airlines in 2008 as jet fuel prices soared and consumer spending on extras like travel plunged. Aloha, ATA, Skybus and Champion Air all were grounded.

Two of the biggest names that disappeared last year took the economy and consumer confidence down with them.

Bear Stearns was headed toward collapse in March, awash in massive losses from securities tied to subprime loans, before the government engineered a fire sale of the 85-year-old investment bank to J.P. Morgan Chase & Co. And the credit crunch that paralyzed the world economy only got worse after Lehman Brothers, a 158-year-old company that helped finance America's railroads, became the biggest bankruptcy in U.S. history.

The ripple effect on the economy of those two failures was evident at malls across the nation. Consumers, already nervous about the falling value of their homes and the security of their jobs, curtailed their spending even more.

With sales and profits dropping and lenders leery of granting new credit, a number of retailers failed. Home goods seller Linens 'N Things began liquidating its stores after originally filing in May for Chapter 11 bankruptcy protection. Apparel chain Steve & Barry's did the same later in the year. Specialty retailer Sharper Image Corp. also vanished. KB Toys is in the midst of restructuring its business and is liquidating its more than 400 stores.

Of all the brands to disappear in 2008, Testa said, consumers may miss department store chain Mervyn's the most since so many shoppers had a connection to the store.

"That's a brand that's been around for a very long time," he said.

Mervyn's, which had been operating for five decades, said in October that it would have to liquidate its stores after filing for bankruptcy protection this summer.

The store's faithful shoppers will likely seek out new places that have the brands and prices they want -- or may just stop spending if they don't find a replacement that resonates with them as much, said Rita Rodriguez, chief executive for the U.S. division of the Brand Union, a firm that helps companies create brand identities.

Beyond the brand names customers will no longer see, people may find many familiar businesses changing. Retailers may operate far fewer stores or only sell their goods online. Banks may become subsidiaries of those that bought them or their names may be joined.

The shakeout among companies this year will give sturdier brands a chance to shine and set them apart from their less-than-prosperous counterparts, experts said.

Testa said the economic Darwinism will mean that only the strongest stores survive, and they'll use the downturn to get more powerful.