OKLAHOMA CITY – American retailers have announced 8,633 store closures this year, eclipsing the 5,844 closings in all of 2018 by almost 48%, with three months left in the year, according to Coresight Research.
OKLAHOMA CITY – American retailers have announced 8,633 store closures this year, eclipsing the 5,844 closings in all of 2018 by almost 48%, with three months left in the year, according to Coresight Research.
Moreover, the tally might reach 12,000 by the end of the year, Coresight speculated.
However, just a few retailers are responsible for most of the closings. Furthermore, retailers are opening stores faster this year than last, reported Coresight, which “focus[es] on disruption at the intersection of retail and technology.”
The 8,600+ closures “represents a significant rise from 2018, but it is a bit misleading,” said Tyler Higgins of AArete. Three main mall retailers – Payless ShoeSource, Charlotte Russe, and Gymboree – constitute “a significant portion of those store closures,” said Higgins, leader of the retail practice at AArete, a global consultancy specializing in data-informed performance improvement.
• Payless ShoeSource stores, a Topeka, Kan.,- based discount shoe retailer announced in February that all of its approximately 2,300+ remaining stores in the U.S. and Canada would close by the end of June. Payless filed for bankruptcy in 2017 and initially closed 400 stores; a dozen of those were in Oklahoma, including one in Law- ton and one in Altus.
• Ascena Retail Group announced that Dressbarn, a women’s fashion retailer, will close all 649 of its stores.
• Gymboree filed for Chapter 11 (reorganization) bankruptcy last January for the second time in three years and announced plans to shutter its 749 remaining stores, throwing approximately 11,000 employees out of work. The company was founded 43 years ago and once operated a chain of more than 1,200 specialty retail stores of children’s apparel.
• Charlotte Russe, a retailer of women’s clothing, footwear and accessories, filed for Chapter 11 bankruptcy in February and announced it would close all of its 494 stores in March. However, subsequently the brand was sold to Toron- to-based YM Inc., which announced it would reopen 100 of the stores.
• Things Remembered, a chain retailer for special occasion gifts such as jewelry and jewelry boxes, picture frames, women’s bags, pocket knives, and tools, filed for Chapter 11 bankruptcy in February and announced plans to close 422 stores. However, Enesco LLC, an Illinois-based distributor of giftware and home/garden décor, purchased 176 of those stores.
• Dollar Tree announced in March that it would close as many as 390 of its Family Dollar stores this year and remodel 200 locations to become Dollar Tree stores. This followed 85 store closures by the chain during the fourth quarter of 2018.
• GNC, a health and wellness retailer, revealed plans to close up to 900 stores in the U.S. and Canada over the next three years as leases expire; many of those sites are in mall locations. More than 190 company-owned and franchise locations closed in the first six months of this year.
• Jewelry and accessories retailer Charming Charlie filed for Chapter 11 bankruptcy in July and plans to close all of its 261 stores in 38 states. The company closed approximately 100 stores during a previous bankruptcy that ended just a year and a half ago. The company said it faced “unsustainable operating expenses, including onerous leases,” at a time when many brick-and-mortar stores are competing against online retailers.
• Gap Inc. announced in February it would spin off Old Navy into its own company as it prepared to close about 230 of its namesake stores worldwide.
• Sears and Kmart will close 120 stores by the end of the year.
Other retail closures announced this year included: Abercrombie & Fitch, 40
stores; Victoria’s Secret, 53 stores in North America; JCPenney, 27 more stores (18 full-line department stores and nine home and furniture stores) in 13 states; Pier 1 Imports, a Texas-based home goods retailer, 57 stores in the fiscal year; plus Bed Bath & Beyond, 40 stores.
“I believe this rise of retailers at risk is driven by the typical indicators: retailers that are overleveraged in debt, are not properly evaluating their square footage, have a foot traffic problem especially in low traffic malls, and/or have failed to adapt to heightened pressure from rivals,” Higgins said. “Nearly all retailers that are at risk fit into one of these four buckets. The large risk-of-bankruptcy numbers are being driven by a small subsection of retailers that fit those criteria.”
Conversely, Coresight reported 3,571 retail store openings so far this year, compared to 3,258 in all of 2018.
For example, Casey’s General Store based in Iowa is extending its reach in Oklahoma. The food-and-fuel retailer is opening stores in northwest Oklahoma City and in El Reno; the company now has 18 stores in this state, mostly in the Tulsa area. Companywide, Casey’s reports it has 2,146 stores in 16 Midwestern states, including Arkansas, Kansas, Missouri and Oklahoma.
“What is being missed is the large abundance of successful retailers,” Higgins said. “These are the retailers that
are being strategic with their footprint, leveraging a successful eCommerce platform, and accelerating the pace at which they can get product into consumers’ hands.” As examples he cited:
• Lululemon. “They have approximately 450-500 stores and continue to marry their differentiated brand with a growth strategy that leverages their brick-and-mortar locations and eCommerce sales. At the end of the second quarter, same-store sales were up 15%, direct-to-consumer sales grew 30%, and digital sales were up 31%. They have launched BOPIS (Buy Online Pick up In Store) in all of their stores. They also are pushing into new fashion categories.”
• Treasure Hunt/Discount Retailers. “One example is Burlington. These types of retailers have had a smaller eCommerce/digital impact, but my expectation is that it is coming. We saw this recently with Marshalls. These retailers have to balance the treasure hunt mentality while staying competitive through eCommerce channels. But one thing they are thriving at is opening brick-and-mortar locations so as to place their stores and products near their customers.”
• Costco. Costco has “historically been in a strong position due to its nearly 91% membership renewal rate combined with their new member acquisition strategies. But more recently, Costco has started to offer free two-day grocery delivery, expand their BOPIS offering, and expanding their digital product availability.”
• Another example is CVS, Higgins said. The company is closing 46 “underperform- ing” stores in 15 states plus the District of Columbia “and continues to reformat its stores, such as adding in SmileDirectClub shops into their stores.”
Retailing is “still a risky industry, but the trends continue to remain strong, with sales still growing,” Higgins said.
“I think the definition of retail is changing. Retailers are no longer the 100-year-old large footprint store. Rather, retailers are those that best connect with their consumers, use their brick-and-mortar presence to get products to their customers faster, and create an experiential offering that consumers desire.”