U.S. retail: Store closings total 3,296 locations
Store closings in the U.S. increased by 97 percent year-over-year, totaling 3,296 locations, according to a research report conducted by Fung Global Retail & Technology. The majority of retailers closing stores are typically mall tenants — department store operators and apparel and electronics sellers.
Meanwhile, value-driven concepts such as Dollar General, Dollar Tree, Aldi and TJX have announced major expansion plans. And in all, Fung Global Retail & Technology reports 2,573 announced store openings thus far in 2017.
Dollar Tree has the highest number of announced store opens thus far this year; the retailer has plans for 650 new locations. Second is supermarket operator Aldi, with 130 new stores. TJX Cos., which operates TJ Maxx and Marshalls, is third with 111 stores.
Value-driven concepts such as discount and fast fashion have been aggressive in expanding their store footprints, despite the difficult retail environment. Categories such as beauty and athleisure are outperforming the market, which is evident in their footprint expansion over the past 15 months.
According to a recent report from real estate services firm JLL, department store closures alone will result in up to 37 million square feet of vacant mall space this year.
Some 380–390 stores will be closed across the JCPenney, Macy’s, Sears and Kmart chains, according to recent announcements from these companies. Fung Global Retail & Technology estimates that these closures will result in a total of $2.5 billion in annual sales being freed up for alternative retailers to grab.
Approximately $1 billion of that total will come from Macy’s closures, $1 billion from Sears and Kmart closures, and $500 million from JCPenney closures.
This month Macy’s will transform into a discount store after its latest announcement of closing 100 more stores in an attempt to slim down its vast real estate portfolio and win more sales on online.
Macy’s stores will have a self-service system, meaning a salesperson is no longer needed to find items such as shoes. The model copies successful off-price retailers like TJ Maxx and Nordstrom Rack.
Customer service was once what set Macy’s apart from those retailers. But now many customers don’t want that level of service when they’re shopping, according to Karen Hoguet, Macy’s chief financial officer.
And Macy’s will be adding more off-price and clearance sections to its stores.
According to the Financial Times, a quintet of big U.S. department stores last week disclosed declines in like-for-like sales for the first three months of the year. The figures that were revealed by Macy’s, Kohl’s, Dillard’s, Nordstrom and JCPenney were below most analysts’ forecasts, suggesting Wall Street has still not got a handle on how fast things are deteriorating in the sector.
The Commerce Department says retail sales increased 0.4 percent in April from March. Sales ticked up just 0.1 percent in March and fell in February.
The increase suggests that consumers may spur faster growth in the April-June quarter after the economy barely expanded in the first three months of the year.
Sales at department stores fell 0.2 percent. Yet a category that includes online retailers reported sales growth of 1.4 percent, the strongest of any group.
The Fung Global Retail & Technology report can be found here.
To read more stories on the U.S. retail beat: