Retail apocalypse

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A Toys “R” Us store under the effects of a liquidation sale in Auburn, Massachusetts as seen on June 24, 2018. That store remained closed beginning on June 26, 2018. The company filed for Chapter 11 bankruptcy reorganization in 2017, and converted it to a Chapter 7 bankruptcy liquidation in March 2018. The stores closed permanently on June 30, 2018.
A Sports Authority store in Flemington, New Jersey, as seen on May 28, 2016. This location also has signs announcing the store's impending closure. The company went bankrupt in 2016.
Store closing sale at the Sears in the Dover Mall in Dover, Delaware in May 2018. The store closed in August 2018.
American Apparel had not made a profit since 2009,[1] and filed for Chapter 11 bankruptcy twice, once in 2015 and another in 2016.[2][3][4]

The retail apocalypse is the closing of a large number of North American brick-and-mortar retail stores, especially those of large chains, starting in 2010 and continuing through 2018.[5][6] Over 12,000 physical stores have been closed, due to factors such as over-expansion of malls, rising rents, bankruptcies of leveraged buyouts, low quarterly profits outside holiday binge spending, delayed effects of the Great Recession,[6] and changes in spending habits. North 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,[7] mostly in the form of competition from juggernaut companies such as Amazon.com and Walmart.

Major department stores such as J. C. Penney, Macy’s, Sears, and Kmart have announced hundreds of store closures, and well-known apparel brands such as J. Crew and Ralph Lauren are unprofitable.[8] Of the 1,200 shopping malls across the US, 50% are expected to close by 2023.[9] More than 12,000 stores are expected to close in 2018, and only 4,000 of them have been planned by several retailers.[10] Several retailers such as Toys "R" Us and The Bon-Ton have liquidated and closed all their stores.

The retail apocalypse phenomenon is related to the middle-class squeeze, in which consumers experience a decrease in income while costs increase for education, healthcare, and housing. Bloomberg stated that the cause of the retail apocalypse "isn’t as simple as Amazon.com Inc. taking market share or twenty-somethings spending more on experiences than things. The root cause is that many of these long-standing chains are overloaded with debt—often from leveraged buyouts led by private equity firms."[11] Forbes has said the media coverage is exaggerated, and the sector is simply evolving.[12] The most productive retailers in the United States during the retail apocalypse are Walmart and Target, some regional department store chains (e.g. Belk, Boscov's, Boyd's, Dillard's, and Von Maur), the low-cost "fast-fashion" brands (e.g. Zara, Uniqlo, Cotton On, Forever 21, and H&M), off-price department stores (Ross Stores and DD's Discounts, Marshalls and Burlington) and dollar stores (e.g. Dollar General and Family Dollar).[13] At least one private equity firm, Sycamore Partners, has made money buying assets from brick-and-mortar chains during the retail apocalypse.[14] Pop-up retail, including seasonal retailers such as Spirit Halloween, have become a common factor during the retail apocalypse operating temporarily in vacant spots after companies go out of business, or store closings, as a result of it.

History[edit]

Since at least 2010, various economic factors have resulted in the closing of a large number of North American retailers, particularly in the department store industry. For instance, Sears Holdings, which had 3,555 Kmart and Sears stores in 2006, including those now spun off to Sears Hometown and Outlet Stores, was down to 866 as of August 13, 2018, with more closures scheduled.[15] Kmart operated 2,171 stores at its peak in 2000,[16] a number that has since dwindled to 360 with further closures planned.[17][18]

The term "retail apocalypse" 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.[19] The Atlantic describes 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, American Eagle.[6] Credit Suisse, a major global financial services company, predicted that 25% of U.S. malls remaining in 2017 could close by 2022.[20]

Affected retailers[edit]

Unaffected retailers[edit]

The retailers below are ones that are defying the retail apocalypse by opening stores, remodeling stores, and/or being able to surivive changing trends. Regardless if they are closing stores, they are allowed here if they are expanding their store count.

Ulta Beauty is opening 100 stores in 2018
As of 2018, Build-A-Bear Workshop had expanded its physical footprint by 12% and had been profitable for four straight years[21]

A-D[edit]

  • Aldi is planning to open 180 new stores by the end of 2018 and grow to 2,500 stores by 2022.[22]
  • At Home opened its 150th store in 2018 and plans to open even more stores.[23]
  • Build-A-Bear Workshop remains as the mall-based toy retailer surviving the retail apocalypse in 2018, after Toys 'R' Us announced plans to close all 735 of its U.S. stores in March 2018. [21]
  • Costco Wholesale opened 8 new stores in the first half of fiscal year 2018 and will open 18 to 20 new stores during the second half of 2018.[24]
  • Dick's Sporting Goods will open 20 stores in 2018, though this is a slowdown compared to before. Ed Stack mentioned that they would open more locations once market rents drop.[22]
  • Dollar General will open 1,846 new stores in 2018, remodel 1,568 stores, and relocate 219 stores.[23]
  • Dollar Tree, also operating Family Dollar, opened 137 stores in fiscal year 2017. The company opened 603 new stores overall in the year of 2017.[25]
  • Duluth Trading Company plans to expand to 100 locations by 2023, mainly opening 15 stores in 2018.[26]

E-G[edit]

H-T[edit]

U-Z[edit]

  • Uniqlo is opening new stores around the world in the future.[when?]
  • UNTUCKit plans to open 25 new stores in 2018, and grow to 100 stores by 2022.[29]
  • Ulta Beauty will open around 100 new stores and remodel 17 existing stores in fiscal year 2018.[23]
  • Walmart opened 89 stores in 2017 and will open more in 2018. No exact target has been disclosed as of April 2018.[24]
  • Warby Parker, an eyeglass retailer, will open 40 stores by the end of 2018.[23]
  • Z Gallerie is opening new stores across the US in the future.[when?]

Factors[edit]

...several trends—including the rise of e-commerce, the over-supply of malls, and the surprising effects of a restaurant renaissance—have conspired to change the face of American shopping.

The Atlantic[6]

The main factor cited in the closing of retail stores in the retail apocalypse is the shift in consumer habits towards online shopping.[30] 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.[31] Another factor is an over-supply of malls,[32] as the growth rate of malls 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 U.S. Congress introduced accelerated depreciation into the tax code in 1954.[33] Despite the construction of new malls, mall visits declined by 50% between 2010-2013 with further declines reported in each successive year.[34] A third major reported factor is the "restaurant renaissance," a shift in consumer spending habits for their disposable cash from material purchases such as clothing towards dining out and travel.[6] 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.[35] 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,[36] the latter of which also influences the desire to understaff retail stores in order to keep claimed profits high.[37]

See also[edit]

References[edit]

  1. ^ Hutchison, Clare (October 5, 2015). "American Apparel files bankruptcy in the US". The Independent. Retrieved November 3, 2015. 
  2. ^ Thomas, Zoe (October 5, 2015). "Will bankruptcy cost American Apparel its cool?". BBC News. Retrieved October 5, 2015. 
  3. ^ Kim, Susanna. "American Apparel, Once Worth Nearly $1 Billion, Is Now Bankrupt". ABC News. 
  4. ^ "American Apparel Chapter 11 Voluntary Petition" (PDF). PacerMonitor. PacerMonitor. Retrieved May 16, 2016. 
  5. ^ Peterson, Hayley (January 1, 2018). "A tsunami of store closings is about to hit the US — and it's expected to eclipse the retail carnage of 2017". businessinsider.com. Retrieved January 4, 2018. 
  6. ^ a b c d e Thompson, Derek (April 10, 2017). "What in the World Is Causing the Retail Meltdown of 2017?". The Atlantic. Retrieved April 10, 2017. 
  7. ^ Photo slideshow of shuttered retail stores and shopping centers Business Insider
  8. ^ The Great Retail Apocalypse Dieworkwear July 19, 2017.
  9. ^ Dominic Rushe. "Big, bold … and broken: is the US shopping mall in a fatal decline?". theguardian.com. July 23, 2017.
  10. ^ A tsunami of store closings is about to hit the US — and it's expected to eclipse the retail carnage of 2017 Hayley Peterson, Business Insider, January 1, 2018
  11. ^ America’s ‘Retail Apocalypse’ Is Really Just Beginning Matt Townsend, Jenny Surane, Emma Orr and Christopher Cannon, Bloomberg, November 8, 2017
  12. ^ Retail Apocalypse? The Sky Isn't Falling – The Sector Is Just Evolving Greg Maloney, Forbes, 2017/10/23
  13. ^ The US middle class is disappearing, which makes dollar stores very happy Helen Edwards & Dave Edwards, Qz.com 8 December 2017
  14. ^ Gottfried, Miriam (March 21, 2018). "How One Investor Made a Fortune Picking Over the Retail Apocalypse". Wall Street Journal. 
  15. ^ Snyder, Michael (January 8, 2017). "It's A Retail Apocalypse: Sears, Macy's And The Limited Are All Closing Store". The Economic Collapse. Retrieved April 10, 2017. 
  16. ^ "KMART CORP Annual Report – Fiscal Year Ending January 29th, 2000". Retrieved April 10, 2017. 
  17. ^ "SEARS HOLDINGS CORPORATION Annual Report – Fiscal Year Ending January 28th, 2017". March 21, 2017. 
  18. ^ "Kmart – Warren, OH 44484". Used phone number to confirm: 330-544-2098. March 21, 2017. 
  19. ^ Driscoll, Kara (March 27, 2017). "RETAIL APOCALYPSE: 3,500 stores or more to close this year". WHIO-TV. Retrieved April 8, 2017. 
  20. ^ Bomey, Nathan (June 12, 2017). "Gymboree files bankruptcy, closing up to 450 stores". USA Today. Retrieved June 12, 2017. 
  21. ^ a b BAHLER, KRISTEN (March 27, 2018). "As Toys R' Us Closes, Only One Major Toy Store Is Thriving in the Retail Apocalypse". time.com. 
  22. ^ a b c d Thomas, Lauren (March 24, 2018). "Ulta, Gap, Target and more: These retailers are still opening stores in 2018". CNBC. Retrieved April 25, 2018. 
  23. ^ a b c d e Driscoll, Kara (March 27, 2018). "No retail apocalypse for these companies: 5 retailers opening stores in 2018". daytondailynews.com. 
  24. ^ a b Sun, Leo (April 25, 2018). "These 9 Retailers Are Actually Opening Stors". Montley Fool. Retrieved April 25, 2018. 
  25. ^ a b c d e "These 17 retail chains are opening thousands of stores in 2018". clark.com. April 6, 2018. Retrieved April 25, 2018. 
  26. ^ CSA Staff (May 7, 2018). "Specialty apparel retailer plots nationwide expansion". Chain Store Age. Retrieved May 7, 2018. 
  27. ^ "Party City joins the list of retailers feasting on Toys 'R' Us remains". Fortune. Retrieved 2018-07-13. 
  28. ^ Thomas, Lauren (25 June 2018). "Party City to open Toy City stores in wake of Toys R Us' demise". Retrieved 26 June 2018. 
  29. ^ "UNTUCKit Continues Physical Expansion With 25 New Stores In 2018". Retail Touch Points. May 18, 2018. Retrieved June 27, 2018. 
  30. ^ Kyle Arnold, Retail apocalypse? Online competition drives store closings Orlando Sentinel, July 16, 2017
  31. ^ Kaplan, Marcia (January 12, 2017). "2016 Holiday Ecommerce Wrap-up". PracticalEcommerce. Retrieved April 8, 2017. 
  32. ^ Marc Bain, America’s vast swaths of retail space have become a burden in the age of e-commerce qz.com July 19, 2017
  33. ^ Gladwell, Malcolm (March 15, 2004). "The Terrazzo Jungle". The New Yorker. Retrieved November 9, 2017. 
  34. ^ Josh Sanburn, Why the Death of Malls Is About More Than Shopping TIME, July 20, 2017
  35. ^ Peterson, Hayley (June 6, 2017). "Amazon's and Walmart's latest moves confirm the death of the middle class as we know it". Business Insider. Retrieved June 6, 2017. 
  36. ^ Rosenblum, Paula. "Walmart's Out Of Stock Problem: Only Half The Story?". Forbes. Retrieved 2017-12-14. 
  37. ^ "The Walmart Out-of-Stock Problem: Lessons Learned". www.rsrresearch.com. Retrieved 2017-12-14. 

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