Gimbels isn’t going out of business today — it already did, nearly four decades ago. If you’ve been searching for current news about the chain, there isn’t any. The story you’re looking for is a historical one, and it’s worth knowing in full.
This article covers when and how Gimbels closed, what drove its decline, what happened to its stores and employees, and what the chain’s failure can still teach businesses today.
Gimbels Is Already Gone — The Chain Closed in 1987
To answer the question directly: Gimbels is not currently going out of business. The chain ceased all retail operations by early 1987. The last store, located in a suburban Pittsburgh mall, closed by January 31, 1987, after losing its lease.
By that point, Batus Inc. — the U.S. subsidiary of British conglomerate B.A.T Industries — had already sold or shut down all 36 Gimbels outlets. The closure of the Pittsburgh store was the final chapter, not the beginning of some new crisis.
Any online references you find to Gimbels today are historical or nostalgic. There is no active Gimbels chain, no current liquidation sale, and no recent announcement of closures. The brand, as a functioning retail business, has been gone for nearly 40 years.
What Gimbels Was at Its Peak
To understand why this story still comes up, you need to know how significant Gimbels once was. This wasn’t a regional discount chain — it was one of the most powerful retail operations in American history.
Adam Gimbel founded the business in 1842 in Vincennes, Indiana. Over the following decades, the chain expanded to major cities including New York, Philadelphia, Pittsburgh, and Milwaukee. The flagship store at Herald Square in Manhattan opened in 1910 and became one of the most recognized retail addresses in the country.
By the 1920s, Gimbel Brothers was considered the largest and most profitable department store retailer in America. It employed thousands of people and sold merchandise at a scale that few competitors could match.
The chain is also deeply tied to American popular culture. Its rivalry with Macy’s — both stores sat near each other in Manhattan — gave rise to the phrase “Does Macy’s tell Gimbels?” which became common shorthand for competitive secrecy. That rivalry was dramatized in the 1947 film Miracle on 34th Street, which cemented both stores in the public imagination and made Gimbels a household name well beyond New York.
How B.A.T Industries Inherited the Chain and Decided to Exit
The turning point for Gimbels came in 1973, when British conglomerate B.A.T Industries acquired the chain through its U.S. subsidiary, Batus Inc.
Under Batus, Gimbels struggled. Sales declined sharply, and the chain was slow to modernize its store layouts, merchandising, and marketing. A 1986 New York Times piece described Gimbels as a “dowdy” retailer that hadn’t kept pace with competitors or shifting consumer behavior. That word — dowdy — tells you a lot. Shoppers saw it as an outdated option in a market that was rapidly changing.
Batus eventually concluded the chain had insufficient growth potential. In January 1986, the company announced it would divest the entire 36-store Gimbels operation, along with other retail holdings including Kohl’s and Frederick & Nelson. This was not a turnaround plan. It was a structured exit.
The decision reflected a broader corporate strategy: cut loose assets that weren’t performing and weren’t likely to improve. For a conglomerate focused on return across multiple industries, Gimbels wasn’t worth the investment required to fix it.
The Store Sell-Offs and the Herald Square Liquidation
Once Batus committed to exiting, the sell-off moved quickly. In May 1986, Batus announced the sale of 8 Gimbels stores. Pittsburgh and Milwaukee locations were rebranded by acquiring chains. Sale negotiations for the New York and Philadelphia stores were described as “well advanced.”
The most high-profile closure was the Herald Square flagship in Manhattan, along with the Lexington Avenue location. In June 1986, both stores closed temporarily to count inventory. They then reopened for a 12-week going-out-of-business sale — markdowns, clearance pricing, and a steady stream of customers picking through stock before the doors closed permanently.
When it was over, roughly 5,000 jobs had been lost from the two Manhattan stores alone. Allied Stores purchased 10 Gimbels locations in New York, New Jersey, and Pennsylvania, converting them to Stern’s and Pomeroy’s. Other locations were absorbed by chains like Marshall Field’s. Shoppers in those cities watched their local Gimbels change signs and stock a different brand — the physical stores lived on, but Gimbels itself did not.
By late 1986, the chain had been largely dismantled. The Pittsburgh store held on longest, but lost its lease and shut by the end of January 1987. That closure ended the Gimbels story entirely.
Why Gimbels Failed: The Real Reasons
No single factor killed Gimbels. It was a combination of structural problems, ownership decisions, and a retail environment that had shifted faster than the chain could respond.
Failure to modernize
Gimbels developed a reputation as outdated. While competitors updated their store environments, merchandise mix, and marketing, Gimbels lagged. Customers noticed. When shoppers start describing a store as “dowdy,” it’s usually already too late to reverse the perception without significant investment.
Corporate ownership that prioritized exit over reinvestment
B.A.T Industries was a conglomerate with interests across tobacco, retail, and financial services. When Gimbels stopped growing at a rate that justified further investment, the rational move — from a corporate portfolio standpoint — was to sell. That’s not unusual, but it meant the chain never got the capital injection it might have needed to compete. The ownership structure made a turnaround unlikely before it was ever seriously attempted.
Competitive pressure from all sides
The retail market in the 1970s and 1980s was changing fast. Discount chains were pulling lower-income shoppers away from traditional department stores. Specialty retailers were pulling higher-income shoppers toward focused, curated experiences. Full-line department stores caught in the middle — especially ones that hadn’t updated their brand or experience — faced pressure from every direction.
Think of it like the Sears story, played out a decade earlier. Sears was once the dominant American retailer, then spent years failing to adapt, and eventually collapsed under the same structural pressures. Gimbels followed the same trajectory, just earlier.
What This Story Still Teaches Businesses Today
Gimbels is a useful case study because it illustrates how dominant market positions don’t protect companies from decline. At its peak, Gimbels was the largest department store retailer in the country. That advantage disappeared within a generation.
A few specific lessons stand out:
- Brand perception erodes slowly, then suddenly. Gimbels didn’t collapse overnight. Years of underinvestment in the store experience gradually built a reputation for being outdated. By the time the problem was obvious, fixing it would have required more than Batus was willing to spend.
- Corporate ownership changes can determine a brand’s fate. When B.A.T Industries acquired Gimbels, the chain’s survival became dependent on whether it fit a conglomerate’s growth strategy — not just whether it could serve customers well. It didn’t fit, and that was effectively the end.
- Asset liquidation is not a turnaround. Selling off stores piece by piece to competing chains is not a restructuring plan. It’s an exit. Businesses that confuse the two often miss the window where reinvestment could have made a difference.
- Competitive threats multiply over time. Gimbels faced pressure from discount chains and specialty retailers simultaneously. Businesses that ignore new competitive formats — assuming their legacy position will hold — tend to face the same outcome.
For more coverage of retail history, business failures, and the lessons they carry for modern companies, Bloom Business Mag covers these topics on a regular basis.
Closing Thoughts
Gimbels is not going out of business. It went out of business in 1987, after a multi-year sell-off driven by declining sales, corporate disinterest, and an inability to keep pace with a changing retail market.
What’s left today is the historical record — a chain that started in 1842, grew into one of America’s largest retailers, became part of popular culture through its rivalry with Macy’s, and then collapsed under the weight of outdated positioning and ownership decisions that favored exit over reinvestment.
The lessons are practical and still apply. Markets shift. Brand reputations drift. Corporate owners make decisions based on their own priorities. And companies that once dominated entire industries can disappear within a decade if they don’t adapt. Gimbels is proof of that — not a current news story, but a useful one.
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