Retail Apocalypse Means Big Changes

retail apocalypse

Retail apocalypse is still going strong.

Begining in 2016 more than 4,000 physical stores have seen devastating closures as  American consumers shifted their purchasing habits. The biggest store slayer of course has been online shopping. Every innovation that has made shopping online easier and more secure has been like another horrible flesh eating virus to retail shops.

 Urban Outfitters’ CEO Richard Hayne compared the American retail scene to the 2008 housing-market collapse that plunged the US economy into a deep recession.

The hardest hit have been traditional retailers, whose strategy of brick and mortar stores has focused mainly on inhouse visual merchandising and customer service to drive their sales. Against the universal and silent attack by online shopping, these giant dinosaurs have taken the worst of it in the past year.

Institutional chains like J.C. Penney and Macy’s announced hundreds of store closures.

Even well-known brands like J. Crew and Ralph Lauren are unprofitable. Many of them have been losing money for a couple of years.

And the effect on commercial real estate has been equally devastating, leading to cannibalistic legal maneuvers and massive closures.

Of 1,200 shopping malls that are left in the US, 50% are expected to close by 2023.

Aside from obvious causes like online shopping (Don’t say ‘Amazon’ in a mall unless you want to see fully grown adults go pale and small children start screaming) economists claim that the historic collapse is related to the middle-class squeeze, in which consumers experience a decrease in income while costs increase for education, healthcare, and housing.

But whether its the middle class or the internet class, in the real world shopping institutions recognizeable for a hundred years are shutting down.

Sears, for decades, the nation’s largest retailer, closed more than half of its stores over the last seven years.

Sears also owns the retail chain Kmart Corporation. K-Mart has already closed more than 60% of its stores, with more closures coming.

The Atlantic calls it “The Great Retail Apocalypse of 2017,”

retail apocalypse 2017A partial list of the major American retailers who have been affected.

Abercrombie & Fitch  Facing declining sales, the once-prominent fashion brand announced last March that it would close 60 of its U.S. stores with expiring leases during its 2017 fiscal year. The chain has closed hundreds of store locations over the last few years

 

American Apparel  has not made a profit since 2009 and filed for chapter 11 in 2015

Aerosoles (AGI HoldCo) filed for bankruptcy in September and will close up to 74 retail stores, leaving only four flagship stores in New York and New Jersey.

 

Alfred Angelo bridal stores shuttered all locations on July 13th.

 

The Andersons conglomerate of stores, closed in June 2017 after 65 years in business.

 

Ascena Retail Group announced on June 12 that it will close at least 250 stores and a further 400 may close unless lower rents for their existing locations can be arranged. Ascena is the owner of several clothing brands: Ann Inc., Lane Bryant, Loft, Dress Barn, Maurices, Justice and Catherines.

 

American Apparel closed 110 stores in April 2017 after being acquired by Gildan Activewear. 2,400 workers were laid off

 

Bebe announced plans to close all stores and focusing online only.

 

Gymboree announced in June that it refused to pay some bills and had over $1 billion in debt.

 

Gordmans filed for bankruptcy in March.

 

Guess closed 60 stores.

 

JCPenney announced in February that it would close 138 stores.

 

Kit and Ace closed all its stores in the US, UK and Australia in April.

 

The Limited filed for bankruptcy, went out of business and closed its remaining 250 stores

 

Macy’s plans to close at least 68 stores and also will eliminate more than 10,000 jobs.

 

BCBG Max Azria announced the closure of its stores
MC Sports closed all stores in 2017

 

Michael Kors is closing 100 to 125 of its standalone stores over the next two years.

 

Payless ShoeSource filed for bankruptcy in April and closed 400 of its stores.

 

Perfumania Holdings, filed for bankruptcy in August and close 64 of its 226 stores.

 

Ralph Lauren closed its New York storefront on Fifth Avenue and kept the Polo Bar Restaurant.

 

rue21, in April announced plans to close around 400 stores. It filed Bankruptcy in May.

 

True Religion announced on July 12, the closure of 27 stores and filed Bankruptcy.

 

Under Armour has closed more than 50 stores due to slowing sales.

 

Wet Seal filed for bankruptcy in January and announced plans to close all 171 stores

 

Bebes out of businessThis is part of an unstoppable migration to online commerce, according to most sources, but in some cases the tech revolution is also leading to a virtualization of product that doesn’t require a physical store anymore, as evidenced by the disappearances of book, music, movie, and game retailers. All of these products were once only available in three dimensions, but all of them are now streamed or exist only as data. Virtualization of these products also led to the disappearance of all manner of goods. Who needs a CD rack anymore? When was the last time you needed a magazine storage rack at your house? How about a fancy bookmark from Hallmark?

The closings also have a long term effect, as there will be less and less real estate investment into the kinds of properties that feed retail sales, making their easy spread during the past thirty years increasingly difficult.

Its a brave new world, folks, especially for those businesses caught in the crosshairs of advancing technology and globally changing shopping hapits.

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