Retail store closures up 175% through the first week of August, store openings up 54%

by Kim Souza ([email protected]) 572 views 

In the volatile retail sector more stores continue to close thanks to more consumers purchasing goods online. Through the first seven months of 2017 store closure announcements have increased 175% from a year ago, according to retail analyst Deborah Weinswig who forecasts up to 9,452 store closures by the end of this year.

So far this year there have been 5,630 closure announcements. Weinswig said closures are tracking at 60% of her full-year forecast.

The retailer closing the most stores to date this year is RadioShack with 1,000 closings. Payless ranks second with 512 U.S. store closures but the discount shoe chain is set to emerge from bankruptcy after writing off about half of the company’s $847 million in debt. Weinswig said Payless plans to launch four large stores in the U.S. which will be its primary focus with secondary market operations in Latin America and Asia.

Teen retailers have been a sector hit hard over the past couple of years. Rue 21 closed 400 stores this year, Wet Seal shuttered 171 stores, and American Apparel announced 110 store closures this year. While the teen retail sector has been littered with casualties Abercrombie & Fitch announced plans to open seven new concept stores by the end of the year. Abercrombie & Fitch is aiming to woo shoppers in for the experience, much the way Apple and Sephora have managed to do.

Department stores continue seeing the most impact from lackluster traffic as apparel purchases gravitate online. Sears and Kmart announced 250 closures this year, J.C. Penney will shutter 138 stores, Gordmans closed 101 stores in their sale to Stage, and Macy will wrap up business in 100 of its locations before the end of the year.

Designer brands that also operate in retail also have struggled. Crocs announced plans to shutter 160 stores this year, Michael Kors will reduce its store footprint by 100 locations, Alfred Angelo will close 61 stores, and Guess will close 60 stores in 2017. Ralph Lauren’s store closures are 23 this year. For Ralph Lauren the closures this year amount to roughly one-quarter of its U.S. distribution points.

Weinswig reports that while store closures continue to rise, some retailers expanding their U.S. footprints in brick and mortar. Discount chains such as Dollar General has announced an aggressive 1,290 new store plan this year, while its competitor Dollar Tree, who also owns Family Dollar, plans to add 650 new locations this year. Other off-price retail expansions this year include: 111 new stores by TJX, parent of TJ Maxx; 100 new stores by Five Below; and Ross plans to grow its store count by 90 new locations by the end of the year.

Discount grocery retailer Aldi plans to add 400 stores in the U.S. this year and its German competitor Lidl, which recently opened its first U.S. store in June, plans to have 100 by year-end. Wal-Mart plans to add 59 new stores but is focusing more on re-models than new locations this year and next. Target plans to open 30 new locations.

In the beauty space, Ulta and Sephora have announced plans to grow store counts by 100 and 70 new locations, respectively. Dick’s Sporting Good plans to ramp up its store count with 52 new U.S. locations this year, while wholesale club Costco will add 24 new venues. Weinswig reports there have been 3,296 new store openings reported in 2017 which is up 54% year over year.

Why would retailers want to invest in more brick and mortar with more sales moving online? The answer according to retail strategist Lee Peterson of WD Partners is because retailers need to evolve into omnichannel players – meaning they have stores for impulse buys and experiential shopping and online options for those who want to save time and money.

Peterson said stores must be an online fulfillment center as well as a social playground that can deliver a great experience that keeps customers returning. He said desired products, consistently good service and technology integrations in stores are a must to fully become efficient at omnichannel.

He said opening another traditional store makes no sense unless the retailer can provide customers with experiences they can’t get elsewhere. For instance he said Nordstrom’s test of Prey of Shoes in six cities allows customers to design their own shoes which are made via 3D printing. Peterson said Converse has similar service in Los Angeles and Levi’s is doing it San Francisco. He said the retailers have conquered the customization aspect and are delivering the kind of experience consumers now expect.