A Sign of the Times-The Demise of Retail Chain Stores and the New Face of Retail
St. Louis, MO/January 8, 2018 (STL.News) –Is it really true that the major department stores that we’ve grown up with are slowing dying off one by one? I just recently found out that the Macy’s store close to where I grew up is closing its doors. Terre Haute, Indiana isn’t that small of a city (population around 61,000) but it is a city with only one mall and a few major department stores like Macy’s, Sears and J.C. Penney that its citizen’s have come to depend on for their shopping needs.
This is very sad news not only for me, since my father retired from the original store at the Terre Haute mall that Macy’s now occupies, but for the many shoppers that count on them and also the many employees that will be out of work. These closings are making a major impact around the country and even though it might feel like there’s a rush to empty out retail space all of a sudden, this situation has been building for some time.
Last year was one of the worst for the retail industry, with record setting bankruptcies and store closings — 8,000 across multiple national chains. Even the biggest names like Barnes and Noble, The Gap, J.C. Penney, Macy’s, Nordstrom, Office Depot, Sears, Starbucks, and Sports Authority were not immune from the closures.
There are several reasons for the demise of the beloved department stores that we’ve grown up with. One big issue is the fact that many retail stores are merely over-stored. It’s a matter of supply versus demand imbalance, lukewarm retail sales growth not balancing out with the increase in retail real estate.
Another matter is the rise of fast fashion retailer’s enflaming the situation. Such stores as Zara, Forever 21 and many others are squashing the bottom line of department stores like Sears, Macy’s, J.C. Penney and L Brands, which owns Victoria’s Secret, Pink, and Bath & Bodyworks.
The type of consumers has also changed over time and along with that, so have their tastes. Baby boomers were more apt to want products that were sold in mass, commercialized and generic compared to the newest shoppers… the Millennial and the Gen Z. The fastest growing generation of new shoppers desires products that are more authentic, locally-sourced, environmentally friendly and ethically made, with fair salaries paid to all in the supply chain.
But the greatest challenge for brick and mortar retail stores is the reality that they used to be the only places where consumers could go to view a broad array of products from merchants. Those times are long gone. Today everyone has all the selection they could possibly want on their phones or laptops thanks to increased competition from online sellers like Amazon. In the merchandise category, online sales now account for close to 13 percent of all retail sales.
So far, things are not looking much better in 2018. Usually the first quarter of any calendar year is store closing season for the U.S. retail industry because the the Christmas holiday shopping season is over, and stores that under-performed need to be eliminated. Macy’s, Sears and Kmart are among the latest major retailers to have recently announced sweeping closures already this year.
On Thursday, Sears Holdings Corp., the parent company of Sears and Kmart, announced it is planning to close another 103 stores– 64 Kmart stores and 39 Sears’s locations. Liquidation sales at the affected locations will begin as early as January 12, and all 103 stores will be out of business by May.
Macy’s also revealed on Thursday morning that it is closing 11 more stores this year — part of a 2016 plan to downsize by 100 stores over several years. Those 11 stores have been identified and four of those stores’ teams have already been notified, including my hometown store. Clearance sales are starting as soon as next week and will run for up to 12 weeks.
In 2017, J.C. Penney announced that more than 100 J.C. Penney department store locations would close down permanently in late July. The department store chain is closing its only location in St. Louis City, Hampton Village Plaza this month. A liquidation sale will began on January 2.
All together major retailers closed more than 5,000 stores in 2017, and things might not be looking all that better in 2018. So far, major retailers have already announced plans to close around 1,000 stores this year. The following list of major retailers closing stores in 2018 is only expected to grow as the year goes on. Here’s where things stand right now:
Macy’s – 11 stores
Sears and Kmart – 63 stores
Bon-Ton – 40 stores
J. Crew – 50 stores
Gap and Banana Republic – 200 stores
Teavana – 379 stores
Ascena Retail Group – At least 268 stores
Michael Kors – 100 to 125 stores