4 problems that pushed Oreck into bankruptcy

The vacuum cleaner company was struggling to compete against rivals with better marketing tactics and technology.

By Kim Peterson May 8, 2013 4:00PM
An Oreck vacuum at a home show in Miami, Florida (© Jeff Greenberg/Alamy)Oreck Corp., a vacuum maker that couldn't turn widespread name recognition into higher sales, has filed for Chapter 11 bankruptcy protection.

The Nashville, Tenn., company said it would continue operating as usual, but will use the bankruptcy protection to get its finances in order while it looks around for a buyer, according to The Tennessean.

Oreck has about 325 employees at its 96 retail stores, the newspaper reported. It also has 250 workers at its factory and about 70 employees at its corporate office.

How did things turn out so badly at Oreck? Based on this writeup in The Tennessean, here are four problems that hurt the company:

The direct sales model wasn't working. Where do you go to buy a vacuum? Wal-Mart (WMT) or Target (TGT), perhaps? Maybe Amazon.com (AMZN)? Not enough people thought about going to an Oreck store or calling the company directly.

The company didn't jump on bagless technology. Shoppers have been hot for bagless vacuums for years, especially after Britiain's James Dyson unveiled his popular line in the U.S. in 2002. It took more than a decade for Oreck to embrace bagless technology.

It clung to infomercials for too long.
Oreck needed to modernize its advertising and marketing strategies, but it inexplicably stuck with late-night infomercials for a long time.

It looked like your grandma's vacuum. Oreck's designs were boxy and out of date. Only recently has the company unveiled sleeker, more modern models.

More on moneyNOW



273Comments
May 8, 2013 4:31PM
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One of the few if not the only American manufacturer of vacuum cleaners.  The owner paid his employees while rebuilding after a hurricane and other good things.  Oreck has seemed to be overpriced compared to the cheap Chinese manufactured products. 

 

I hope they can come out of Chapter 11 or America will lose one more battle against the cheap Chinese products again.  

May 8, 2013 4:46PM
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Bagless vacuum cleaners suck. Oreck is a good brand, and one of the best vacuum's out there.  Why fix something that isn't broke ? Why does everything have to be aerodynamic and artsy fartsy looking? The design works just as well as the vacuum does.
May 8, 2013 4:48PM
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I really hope Oreck is able to come out of their slump.  I've had an Oreck for the last 6 or 7 years. No issues, it's not bag less either and I LOVE IT!  It still delivers on all levels.  Good luck Oreck you have a great product, that I hope is around for many more years to come.
May 8, 2013 4:40PM
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I could never figure out the allure of bagless vaccums.  I remember those when I was a kid before they manufactured ones with bags  Everytime you went to empty one a cloud of dust flew in your face.  No thanks,  I will always stick to the ones that use bags. 
May 8, 2013 4:54PM
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I have owned the same Oreck for 15 years.  In that time it  only needed routine service twice.  Still  runs great.   If Oreck makes it through this, I will stay loyal when another is needed.
May 8, 2013 4:56PM
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Orecks aren't bad vacuums.  However,  I can see why it is heading into Chapter 11.

Honestly, even Dyson is selling at Walmart and Target. Why did Oreck not do that? I hope they can pull out of it because Oreck is a good quality vacuum.

May 8, 2013 4:50PM
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Someone please tell me why to go bag less? At some point when you’re done you need to empty all the dust and dirt into some kind of bag or trash can, and at that point you will have to breathe that dust and crap in..... It's a shame the company can’t manage their finances, I have owned their product in the past and it worked quite well! Never understood bag less vacuums.

May 8, 2013 5:09PM
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I have a Oreck that is over 7 years old and I wouldnt trade it for anything that is on the market today.

 Its lightweight but powerful and easy to handle.  I have tried the bagless vacuum cleaners and they really defeat the purpose when you go to empty the canister and the dust and dirt flies all through the air.

 

Sure hope Oreck can turn things around and try some different marketing approaches. Consumers would rather buy a cheap piece of crap at Wal-mart that they have to replace every 3 or 4 years than to pay a little more for something that will last a much longer time and have stores that will service them when they need repair or routine maintnance. My grandmother had a old Kirby vacuum cleaner and you couldnt break it if you tried. Its a different world now and everything is disposable.

May 8, 2013 4:49PM
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Oreck is bankrupt?  That sucks.  (Come on someone had to say it.)
May 8, 2013 4:51PM
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Bagless vacs are a horroble mess when it comes time to empty them. The Dyson is also not especially impressive. Just goes to show you that the Amirican consumer is shallow and fickle. Flashy marketing and low price are the way to win most Americans, for a minute.

May 8, 2013 5:15PM
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Sorry to hear of this.  But they will climb up and continue to be the makers of a high quality system.  I have had mine for 16 yrs and still love it.  Will never use a bagless-who willingly allows dust and dirt to plume up into their face.  UGH!!
May 8, 2013 6:25PM
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Orecks may not look flashy but they are sturdy.  Next time you see a dyson try flexing it a little by twisting the handle.  They feel like cheap kids toys and have way too many parts for something that spins a brush and sucks up dirt.
May 8, 2013 5:04PM
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I hate that. I think they were very good vaccum cleaners. I hope it won't be the end of them.
May 8, 2013 5:33PM
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I love my Oreck XL I bought it at Target. 
May 8, 2013 5:36PM
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It figures that a good American company would suffer a future like this when an over priced idiot like Disson over charges for a vacuum that really isn't any better that the next but spoiled Americans buy the Disson because it is nothing more than a status symbol
May 8, 2013 6:03PM
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Best vacuum I ever owned. I foolishly bought into the whole Dyson concept. I sold it to someone else a year later. Heaviest vacuum I ever owned and filthy to change out the canister all the time. It had good sucking power, but once I went back to Oreck I never looked back. Lightweight, easy to use. My bag gets changed about three times a year. Big deal. I'm not that lazy that I can't pull it off and put in a new one. I hope they get back on their feet real soon, cause I never want to have to change brands again!
May 8, 2013 5:12PM
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...OK...here is a counterpoint for `bagless’ vacuums. I had a very nice and very reliable and durable vacuum of the Montgomery Ward brand...can readers see where this going?...The vacuum still remains great, still with a metal body, but there are no `bags’ available on the commercial market to fit it.

May 8, 2013 5:16PM
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How about ditching the dead weight. 70 workers at Corporate plus the 96 store managers and the management at the factory. Too many generals and not enough solders.
May 8, 2013 5:48PM
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It's really difficult for American manufacturers to compete against the Chinks and Mexicans as long as our government permits unfettered free trade.
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