All the traditional retailers of the United States of America have closed many stores, more than they closed in the year 2017. Major retail companies have closed as many as 8,139 stores in 2017. In 2019, by July 5 an announcement was made to close down 7,062 stores. Meanwhile, in the year 2018, 5,864 stores were closed as per reports from market research. If the speed remains then by year-end these major retailers may shut down as many as 12,000 retail stores. The market research has even forecasted that these closure numbers will be similar to doubling the number they achieved in 2008. Thousands of people are getting unemployed because of this and they can earn money investing minimum money by taking the help of casino bonuses guide.
Back in the year 2008, 6,163 retail stores were shut down the entire year in the biggest recession that happened. In contrast to the 7,062 stores that were shut down, only 3,258 stores were opened. This shutting down of stores has lead to a huge human toll as innumerable jobs were lost which is another negative aspect. 53,248 jobs have been cut only through June 2019 and 98,563 jobs loss were counted for the entire 2018.
An overview of the damage done in 2019 –
- Gymboree, kids clothing retailer declared bankruptcy and closed 749 retail stores.
Charlotte Russe, renowned women’s apparel line went bankrupt and closed more than 400 of their retail stores.
- General merchandise distributor, Shopko Stores, in March declared bankruptcy and closed 371 stores. They could not find any buyer for their stores hence the decision.
- Fred’s, another regional discount retailer, reported closing as many as 129 of its retail stores. They will leave around 80 stores that are in Dublin, Georgia.
The 70-year-old distributor, Cato Fashion has closed down 46 of their retail store in 2019 as per reports from this market research.
- Stage Stores, a well-known line of the departmental store chain, claimed in March that they would close as many as 40 to 60 stores that are not performing.
- The big-name of lingerie line, Victoria’s Secret has reportedly decided to close 53 retail stores. The reason behind this is the constant survival of competition from other brands. The list of competitors includes big retailers and start-ups.
- Dressbarn, a well-known women’s clothing line declared in May that they would shut down 661 stores. This was a big decision that the brand had to take keeping the losses in mind.
- Payless ShoeSource, the known footwear line also declared in February that they are going to close down 2,600 retail stores. This decision was taken keeping the entire US and Canada market in mind. However, they excluded 500 stores in the US from this list.
Many reasons lead to major retailers to shut down their retail stores which may be heavy in number as stated before.
Huge online competition
Since 2017, it has been noticed that retail operations have been difficult because of online marketing. This inception has led to the loss of major retail stores which was named Retail Apocalypse. This happened as the US residents were bitten by the online shopping bug. Consumers started to like the trend of shopping while sitting at the comfort of their home. Sitting in front of your computer and purchasing things were liked compared to the long queues in the retail stores. This also meant avoiding a two way trip to the stores.
As per reports, e-commerce purchases showed a total of 10.2 percent from all the retail sales in the first quarter of 2019. This percentage has seen a consistent rise since 2000 according to reports of the Federal Reserve Bank of St. Louis.
The decrease in the number of malls
The rapid decline in the number of suburban malls is a major contributor to the increase in the retail store shutdowns. From the year 1970 to 2015, US malls have grown in numbers to almost twice the population. Eventually, with the facilities of shopping at the comfort of one’s home, the retail environment became saturated. This further led to the failure of many malls which had to be gradually closed down.
With the closing of malls and their stores, they started losing their favorite shoppers including the walk-ins. This led to the loss of huge revenue which resulted in closures of many other retail stores. The vacancy reported in the second quarter of 2019 was at 9.3 percent which was the same as the first quarter.
The recession caused shoppers to cut down on expenses
With the Great Recession that occurred, many active shoppers started shopping from low-cost stores. These stores were local and not typically as big as the traditional malls where retail stores were set up.
Lookout for spending on experiences
With the circle of shoppers that is constantly expanding, more and more young people are becoming aware of the functioning. They are more inclined to spending on experiences and not mere things. They are not only on the lookout for consumer products but treat the entire experience of shopping more like fun. Hence, only retail stores have been left behind by stores that offer sports items or even aquarium stores. These have consistently outperformed when youngsters have entered the shopping scene.
Private Equity Firms
Private equity firms are known to weigh down the retail companies with huge debt amounts. This is one major reason why retail companies are shutting down or selling off their stores. For instance, when the very reputed Gymboree Group filed for bankruptcy in the year 2017, June, they sold their stores off to their creditors. They closed 375 stores in June 2017 and later in 2019 they closed the remaining stores as well.
Announce of Store closing every quarter
The first quarter of every calendar year marks the announcement for all store closures. The reason behind this is during the previous year’s holiday shopping season shows the performance of the stores. If the performance is good, they observe its work for the next quarter else they are closed.
The reason behind closing down these huge numbers of retail stores are varied and consist of tough decisions from the owners. However, when nothing else helps, shutting them down is the best decision the owners can take.