Many U.S. retailers have come to realize they have too many stores in these turbulent times. Omnichannel retailing has shifted sales to the Internet, profitability of apparel departments has eroded, and customer traffic in stores is sparse. Today’s shoppers are not frequenting traditional retailers’ stores or websites, preferring to shop with e-commerce retailers such as Amazon and others that are recognized as trusted leaders in price, value, and quality. As consumers shift shopping habits, for many retailers their very survival is at stake.
Below I pulled together a list of announced store closures for the current year. When I added it up it was a much larger number than I had anticipated. As I write I doubt the list is complete since news of more closings may be announced. I estimate that at least 50,000 people will lose their job because of the announced closings. However, some stores are looking for new ways to attract shoppers, as I discuss below.
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The 2017 closings:
| Payless Shoes | 1,000 | |||
| Radio Shack | 552 | B | ||
| The Limited | 250 | Closed all stores Jan 9 2017 | ||
| Family Christian | 240 | |||
| Wet Seal | 171 | B | Closed all stores Jan 26 | |
| Crocs | 160 | |||
| J.C.Penney | 138 | Starting April 2017 | ||
| Chico | 120 | |||
| BCBG Max Azria | 120 | B | Early Spring | |
| Kmart | 108 | Spring | ||
| American Apparel | 104 | B | Closed all stores | |
| Office Depot | 100 | E | ||
| hhgregg | 88 | B | ||
| CVS | 70 | |||
| Macy’s | 63 | Early Spring | ||
| Guess | 60 | |||
| Gander Mountain | 60 | B | ||
| Abercrombie & Fitch | 60 | As leases expire in 2017 | ||
| American Eagle | 50 | 150 over 3 years | ||
| Sears | 42 | Spring | ||
| Eastern Mountain | 35 | |||
| TOTAL | 3,591 | |||
B= Bankruptcy E=Estimate
In addition, there is published speculation that J. Crew, Gymboree, and Claire’s will also close units. In New York City, one has only to wander down Madison Avenue or Broadway, or stroll through Soho, to be aware of many empty stores. The lower tenancy is also obvious in malls I have visited. One must worry about the future of less important malls.
Peter E. Drucker * , in his excellent book Managing in Turbulent Times (Harper & Row 1980), pointed out that the fundamentals for survival and success in an existing business are liquidity, productivity, and the cost of the future. Drucker felt that in turbulent times the balance sheet becomes more important than the profit and loss statement. He said that management must put financial strength before earnings. In turbulent times, it is essential to knows the minimum liquidity to stay in business.
Four resources must be managed consistently, systematically, and conscientiously for productivity. They are – according to Drucker – capital, crucial physical assets, time, and knowledge. Executives are, of course, aware that they must manage productivity. But most of them believe this means finding the “trade off” between a less productive and a more productive resource. Yet Drucker felt that there was little evidence that this “trade-off” really works to increase overall productivity.
We have now come to the point in the retail cycle where unproductive stores can no longer be carried on the books of good operating companies. The environment has finally forced managements to come to grips with reality. I still believe that even more stores must be closed. It is the super-regional mall, with many stores continuing to blossom in these centrally located shopping centers, that will survive. Management of these malls must monitor the success of the individual operators and like some malls, move adjacencies, coordinate affinities, and eliminate weak operators.
I am encouraged that retailers are still working on ideas to bring consumers into their stores. For example, J.C.Penney has begun to revamp its stores to reflect what customers want. It will have 100 appliance showrooms, add smart home technology, and emphasize Nike and Adidas in special shops. Macy’s emphasis on shoes is equally exciting. While Nordstrom has placed much attention on fashion at its off-price concept The Rack.
The difficult times are forcing retailers to renew themselves. New leaders, like Macy’s Jeff Gennette, will lead companies on new roads to success. The retail cycle does not end – it evolves. I am looking forward to the new initiatives that will become more important as stores close and consumers drive change.
* Dr. Peter F. Drucker, born 1909 in Vienna, died 2005 in California. He was a distinguished and influential thinker and writer on management theory and practices. Taught at Bennington College (1942-1949), New York University (1950-1976) and Claremont Graduate School (1971-2002). President George W. Bush awarded Drucker the Presidential Medal of Freedom in 2002.