This article needs to be updated.(October 2020)
|Location||Worldwide; initially began in the United States, Canada, the United Kingdom, Ireland and New Zealand|
A retail apocalypse is the closing of numerous brick-and-mortar retail stores, especially those of large chains worldwide. The current apocalypse resulted from mandated business closures due to COVID-19, which eclipsed the so-called apocalypse then underway, from about 2010.
In 2017, over 12,000 physical stores closed due to factors including over-expansion of malls, rising rents, bankruptcies, leveraged buyouts, low quarterly profits outside holiday binge spending, delayed effects of the Great Recession, and changes in spending habits. American consumers have shifted their purchasing habits due to various factors, including experience-spending versus material goods and homes, casual fashion in relaxed dress codes, as well as the rise of e-commerce, mostly in the form of competition from juggernaut companies such as Amazon.com and Walmart. A 2017 Business Insider report dubbed this phenomenon the "Amazon effect," and calculated that Amazon.com was generating greater than 50% of the growth of retail sales. Dissenting economists and experts asserted that recent retail closures are a market correction, suggesting that "retail apocalypse" is a misleading phrase that instills insecurity in the 16 million U.S. retail workers.
Research published by global retail analyst IHL Group in 2019 suggests that the so-called retail apocalypse narrative was an exaggeration, with "more chains that are expanding their number of stores than closing stores.” That year, retailers in the United States announced 9,302 store closings, a 59% jump from 2018, and the highest number since tracking the data began in 2012.
Corporate bankruptcies and store closings increased significantly from 2020 due to the financial impact of the COVID-19 pandemic, with most retail stores, especially already struggling mall-based retailers, closing for extended periods of time. J. Crew, Neiman Marcus, Stage Stores, JCPenney, and Tuesday Morning were among the retailers to file for bankruptcy during the pandemic.
The most productive retailers in North America during contemporary retail apocalypses are discount superstores (Walmart, Target), low-cost "fast-fashion" brands (Zara, Uniqlo, Cotton On, H&M), off-price department stores (Ross, Marshalls, Burlington), pet stores (PetSmart, Petco) and dollar stores (Dollar General, Dollar Tree).
"Retail apocalypse" appeared in print in an early 1990s essay by It's Not My Department! author Peter Glen. The term became controversial as used by media to refer to multiple brick-and-mortar store closures resulting from shifts in consumer spending.
The phrase began gaining widespread usage in 2017 following multiple announcements from many major retailers of plans to either discontinue or greatly scale back a retail presence, including companies such as H.H. Gregg, Family Christian Stores and The Limited all going out of business entirely. The Atlantic described the phenomenon as "The Great Retail Apocalypse of 2017," reporting nine retail bankruptcies and several apparel companies having their stock hit new lows, including that of Lululemon, Urban Outfitters, and American Eagle. Credit Suisse, a major global financial services company, predicted that 25% of U.S. malls remaining in 2017 could close by 2022.
Since at least 2010, various economic factors have resulted in the closing of many stores in North America, the United Kingdom, and Australia, particularly in the department store industry. For example, Sears Holdings had more than 3,500 stores and 355,000 employees in 2006. By the end of 2016, Sears operated 1,430 stores. In October 2018, Sears filed for bankruptcy and announced they would close an additional 142 of their 687 stores. At the time of filing, Sears had 68,000 employees.
From 2017, the phrase is frequently applied to brick-and-mortar closures in retail, with the retail apocalypse creating a domino effect on manufacturers and suppliers; Hasbro, for example, cited the losses of the Toys "R" Us chain as a major cause for lost revenue and layoffs the company imposed in October 2018.
A 2019 analysis conducted by IHL Group international research and advisory firm found that when a retailer closes many stores, it indicates more about the individual retailer rather than the retail industry overall. In 2019, the 20 stores announcing the most closures represent 75% of all closures. IHL found that for each retailer closing stores in 2019, more than five retail chains are opening stores, an increase from the 3.7 ratio of 2018. IHL also reported that the number of chains adding stores in 2019 had increased 56%, while the number of closing stores decreased by 66% in the last year.
As of May 2020, bankruptcies and store closings were expected to intensify due to widespread business closures and the resulting financial impact of the COVID-19 pandemic. J. Crew, Neiman Marcus, Stage Stores, JCPenney, and Tuesday Morning were among the first major retailers to file for bankruptcy during the pandemic.
Shift to e-commerce
The main factor cited in the closing of retail stores in the retail apocalypse is the shift in consumer habits towards online shopping. Holiday sales for e-commerce were reported as increasing by 11% for 2016 compared with 2015 by Adobe Digital Insights, with Slice Intelligence reporting an even more generous 20% increase. Comparatively, brick-and-mortar stores saw an overall increase of only 1.6%, with physical department stores experiencing a 4.8% decline.
Another factor is an over-supply of malls as the growth rate of malls in North America between 1970 and 2015 was over twice the growth rate of the population. In 2004, Malcolm Gladwell wrote that investment in malls was artificially accelerated when the United States Congress introduced accelerated depreciation into the tax code in 1954. Despite the construction of new malls, mall visits declined by 50% between 2010 and 2013 with further declines reported in each successive year.
A major reported contributing factor to the supposed retail decline is an on-going "restaurant renaissance" — a shift in consumer spending habits for their disposable income from material purchases such as clothing towards dining out and travel.
Shrinking middle class
Another cited factor is the "death of the American middle class," resulting in large-scale closures of retailers such as Macy's and Sears which traditionally relied on spending from this market segment. Particularly in rural areas, variety stores such as Dollar General, once thought to be unaffected by the apocalypse since they have continued growing rapidly, are now perceived as being at best a symptom of the phenomenon, and at worst a direct cause of rural, independent retailers collapsing, unable to compete with the lower margins that national chains can sustain.
The final factor in poor brick-and-mortar sales performance is a combination of poor retail management coupled with an overcritical eye towards quarterly dividends: a lack of accurate inventory control creates both underperforming and out-of-stock merchandise, causing a poor shopping experience for customers in order to optimize short-term balance sheets, the latter of which also influences the desire to understaff retail stores in order to keep claimed profits high. Furthermore, many long-standing chain retailers are overloaded with debt, often from leveraged buyouts from private equity firms, which hinders the profitable operation of retail chains.
At the same time, online shopping has been booming during the coronavirus-related lockdown. Most of the major e-commerce retailers in the United States were classified as essential businesses and were not required to shut down. Buyers stated that they would deliberately buy products from such categories as food and drinks, hygiene, household cleaning, clothing, health, and consumer electronics online rather than in person due to COVID-19. The outbreak is said to have changed shopping behavior permanently: in the US, 29% of surveyed consumers stated that they had no intention to ever go back to offline shopping. In the UK, this number reached 43%.
Coresight Research data later indicated that store closures had reduced by 49% from 2020 to 2021, with store openings increased by 36% over the previous year. Clothing and accessories accounted for 43% of retail closures in 2021. In July 2022, the analytics firm published findings that store openings had exceeded store closings for the first half of 2022, and that there were 10% fewer closings and 3% fewer openings than in 2021.
Major retail bankruptcies 2011 - 2021
Below is a sample of the numerous retail chains that declared bankruptcy during the ten-year period, 2011 – 2021.
|Company name||Time period||Number of stores closed||Bankruptcy||Open stores||Source|
|Borders Books||2011||Closed all stores||Liquidated||None|||
|The Bon-Ton||2018||Remaining 267 locations liquidated||Filed February 2018||None; last store closed October 2020|||
|Sears Holdings||2013–2021||1,380 Kmart and Sears stores||Filed October 2018
Acquired out February 2019
|J. C. Penney||2015–2020||177||Filed May 2020||669 (May 2022)|||
|Toys "R" Us||2018||Closed all US, UK and Australia stores.||Filed 2017
|80 Canada stores, 160 Japan stores|||
|J. Crew||2018–2020||54||Filed May 2020||492|||
|Barneys New York||2019||15||Filed 2019||None|||
|Forever 21||2019||200 (approx.)||Filed September 2019||600+|||
|A.C. Moore||2019–2020||145||Filed September 2019||Became Michaels|
|Payless ShoeSource||2019–2020||2,500 – all stores in North America and Puerto Rico (2019)||Filed February 2019
Emerged January 2020 (second bankruptcy)
|700 (Latin and Central America, Caribbean, Southeast Asia, Middle East and India)|||
|Pier 1||2020||Remaining 942 stores||Filed February 2020||None|||
|Neiman Marcus||2020||6||Filed May 2020||37|||
|Tuesday Morning||2020||196||Filed May 2020||490|||
|GNC||2020||2450 (approx.)||Filed June 2020||4,850 (approx.)|||
|True Religion||2017 & 2020||37||1. Filed July 2017
2. April - Nov. 2020
|Brooks Brothers||2020||253||Filed July 2020||171|||
Researchers have identified customer experience and brand reputation as two factors that can influence whether a retailer will survive. Some more established retailers like Toys "R" Us may not have been as responsive to changing trends in consumer behavior. Some researchers have made recommendations based on trends and technologies to improve the outlook for traditional brick and mortar retailers.
Employing technology, Ikea became one of the first retailers to use Apple's ARKit to develop an augmented reality app that allowed customers to visualize 3D renderings of Ikea products as they would appear in a certain room or place. Macy's, American Eagle, Nike and Sephora were reported to be implementing various technologies to integrate digital experiences to improve consumers' physical shopping experiences. Sephora has installed smart mirrors that use augmented reality technology to allow customers to try on makeup. Walmart automated some aspects of its supply chain, while Kohl's streamlined its retail presence, reducing the size of some stores from 90,000 to between 60,000 and 35,000 square feet. starting the use of robots to help clean and stock shelves. Company executives have said robots lower costs and improve efficiency, but employees report they don't like working with robots. Lowe's has been using LowesBot to help customers find items.
According to a 2018 study from the International Council of Shopping Centers, new stores can increase traffic to retailer websites by an average of 37% and drive up share of web traffic within that market by 27% in what is called a "halo effect". Prior to the onset of the COVID-19 pandemic, Forbes outlined several aspects that aid retail survival, highlighting brand reputation as the topmost factor. In February 2020, Monash University in Australia underlined the three key factors for a healthy survival during an apparent retail apocalypse as delivering a "great in-store retail experience", customer-targeted stock offerings, and "seamless omnichannel integration".
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Today, the brand owns over 600 stores
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