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Gottschalks part of a valley trend

If the reported liquidation of the Gottschalks department store chain takes place, it will be part of a continuing shift in the retail landscape in the Northern San Joaquin Valley.

The Fresno-based retailer has been on the brink of closure since filing for bankruptcy protection in January. The 104-year-old firm has been looking for a buyer to take over its troubled 58 stores in six Western states.

Bids for the company were due Monday. Although a decision by the Bankruptcy Court judge in Delaware, where Gottschalks is incorporated, isn't expected until late today, reports surfaced late Monday that a group of liquidators will take over the company. That group was competing against a Chinese retailer, which wanted to keep Gottschalks open, and another liquidator.

On Tuesday, workers at Gottschalks headquarters in Fresno were told to clean out their desks in anticipation of shutting down operations Friday.

Closure of Gottschalks, which employs about 5,000, would mean more than 80 people at each Modesto store would lose their jobs. With the unemployment rate in Stanislaus County at a 13-year high of 16.9 percent, finding jobs in the valley is difficult for displaced workers.

Liquidation of Gottschalks would follow the closure of Mervyn's, Linens 'n Things, Circuit City and countless small businesses throughout the region.

City of Modesto Finance Director Wayne Padilla said it's not clear how the loss of Gottschalks stores would affect the city's revenue projections. He said he plans to consult with the city's sales tax adviser next week to get a better idea of what might happen. Gottschalks is one of Modesto's top 10 generators of sales tax.

In the past, Padilla has suggested that regular customers at stores that go out of business shift their shopping to competitors. Circuit City customers, for example, might go to Best Buy. Or, Mervyn's customers might buy clothes at Target.

"I don't think it's going to be the Target crowd, but it could be higher-end stores," he said.

Sacha Joseph-Mathews, who has a doctoral degree in marketing and teaches at the University of the Pacific in Stockton, said the closures are part of an ongoing retail shift.

Retailers 'have to adjust'

Joseph-Mathews said consumers' demands are changing, with more emphasis on value.

"What's going to have to happen is that all retailers are going to have to adjust and be more innovative to satisfy consumers," she said. "The ones that don't, the more static businesses, probably won't make it.

"The average consumer has so many options for services, four or five at least. So they don't have to go to the same store they have in the past. They don't have to go the traditional route."

Ed Odermatt, a vice president at Shoes That Fit, said he was uncertain how the closure of the Gottschalks store at Century Center at Oakdale Road and Orangeburg Avenue will affect his firm's shop in the same center.

Odermatt said the loss of Gottschalks likely would mean less traffic at the center, never a good thing. But because Gottschalks sells shoes, he expects to see some new faces in Shoes That Fit.

Still, Odermatt said, it would be better for all the center tenants if the large space occupied by Gottschalks didn't go dark. "The best thing would be if they could stay right where they are," he said.

With Mervyn's closing and Gottschalks facing possible liquidation, Odermatt said the east side of town is even more underserved by retailers than in the past.

Casey Morasca, a department manager for J.C. Penney at Vintage Faire Mall, said the Gottschalks situation is difficult to watch. "We are saddened to see this happen to another retailer and mall anchor tenant," he said.

Morasca said the two retailers overlap with some merchandise, so consumers won't have to change their shopping habits if Gottschalks closes. "They can still come to the mall and get what they're looking for," he said.

Bee business editor David W. Hill can be reached at dhill@modbee.com or 578-2336.

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