Why Are 12,000 Retailers Expected To Close Their Doors This Year?
The decline in retail stores isn’t a new trend. CNN Money reports that in 2017, over 7000 retail businesses shuttered their doors, a record number for store closures. This number is expected to hit 12,000 by the end of this year, with more store closures expected to lean heavily on the profitability of physical retail outlets.
One of the most significant contributors to the fall of these brick and mortar stores is the growth and continued prosperity of online shopping. The Federal Reserve Bank of St. Louis notes that as much as 10.5% of overall purchases for the first quarter of 2019 were done online. Consumers prefer to shop online because it’s a more straightforward method of getting what they want without having to face the hassle of the crowds. The ease of online shopping has led to the meteoric rise of businesses such as Amazon and eBay.
The Growth of Amazon and Online Shopping
Fit Small Business compares Amazon and other retailers to the horsemen of the retail apocalypse. In many cases, the description is warranted, as Amazon and other online retailers have impacted small businesses to a massive extent. Competition is already high against nationwide chain stores. With a wider variety of items and a lower price per item, Amazon offers a selection of choice that small retailers can’t compete with.
Exploring the Store Closures
To truly understand the extent of closures that the industry is facing, one needs to take a look at what stores have ceased to function. Each company mentioned here is not a small business, but rather an established enterprise built on a brand. Despite being so recognizable, they still need to close selected outlets to deal with the increased pressure from online retail sites. Among the stores that have closed are:
- Dressbarn: A fixture in most strip malls and shopping centers, Dressbarn’s 650 outlets will be closing in 2019.
- Macy’s: While there are still several outlets open for business, Macy’s has decided to shut down 4 of its outlets across the country.
- Crew: Another fixture of strip malls around the country, J. Crew is feeling the closure of these centralized shopping areas slowly. They plan to close 20 outlets in 2019.
- Fred’s: Expected to shutter 312 outlets by the end of 2019, Fred’s is closing more than half of its open outlets to streamline their business model and slough off dead weight.
- GNC: USA Today mentions that GNC is expected to terminate over 900 of its stores throughout the country before the end of 2019.
- Bed Bath & Beyond: The home-furnishings retailer, while still popular, intends to close off some of its less profitable stores, a total of 40 terminations expected in 2019.
- C. Penney: More than a hundred years old, J.C. Penney’s fortune came from exploiting the catalog retail business. The brick-and-mortar business, however, is suffering from 27 closures expected in 2019.
- Victoria’s Secret: Despite being a household name, the brand has failed to keep up with expectations of its core target demographic, and as such will see a closure of 53 stores by the end of this year.
- CVS: The pharmacy giant has over 9000 retail outlets around the country, but as recently as April it announced it was shutting 50 of those locations for underperforming on revenue generation.
- Office Depot: With more and more businesses moving away from office supplied and into digital technology, companies like Office Depot are at a disadvantage. The supplies retailer expects to close 59 stores by the end of 2019.
- Gap: In the early 90s and 00s, The Gap was the coolest store in any mall. Over the next two years, however, as many as 230 of those stores are going to close because of lack of sales.
- Pier 1: While there is still a market for quirky furnishings, Pier 1 Imports may be on a one-way trip to bankruptcy in 2019 according to Retail Dive, with up to 145 of its stores closing their doors in 2019.
- Kohl’s Off/Aisle: A chance that didn’t work out, Kohl’s intends to shut all of its Off/Aisle brand stores at the end of 2019. Additionally, four other Kohl’s retail outlets are expected to close as well.
- Walmart: Despite having such a ubiquitous presence across the US, Walmart is also feeling the retail pinch, with the giant expected to terminate 17 stores in 2019.
A Change in the Wind
The volume of consumers that have changed their preference for online shopping continues to increase. The closing of strip malls around America, coupled with more availability from online sources means that most customers see online shopping as the best option they have available to them.
The disruption of the brick-and-mortar retail stores was an expected result, but the rapid growth of online sales has been a surprising factor in the closure of these businesses. Many of the retail chains that have closed outlets already have online stores, allowing them to capitalize on the growing trend of e-commerce. For those that haven’t yet realized that the wind has changed, their window of opportunity is quickly closing.