Record year for store closures
Last year there were 5,864 closures and we are still only a third of the way through the year so the figures look set to rise. There is a backlog of bankruptcies in the sector, and to be competitive big chains are undertaking a ruthless closure operation for a number of their under-performing stores.
Big name shutdowns
Some of the big names who have filed for bankruptcy this year include Charlotte Russe, Gymboree, Shopko and Payless, with the latter store closing the highest amount of shops. Between them they will close down a total of 3,720 stores according to a detailed report from Coresight Research. Other names that are known to be struggling include Walgreen, GNC, Family Dollar, Victoria's Secret and Signet Jewelers who are on big economy drives to try and save money.
Crisis affects the whole sector
Although some retailers have adapted and responded well to the changing markets, even thriving companies such as Target and Walmart are pruning back some of their branches and have been closing certain stores, however, they have also opened others to make innovative changes. Even stores such as Macy's Nordstrom and Kohls have been reducing the number of stores, possibly as a pre-emptive move to consolidate their position in an increasingly unsteady economy.
Online sales continue to grow
One of the factors in the closures is the significant and continued growth in online shopping which has started to replace physical purchases in stores. Online sales currently make up about 16% of retail sales in the U.S. today, but are set to rise to 25% by around 2026 and may keep on escalating as the internet age continues to affect retail outlets. If the predicted figures are correct then by 2026 this could mean the astonishing closure of up to 75,000 stores based on current projections. Areas particularly affected would be clothing stores, consumer electronics, sporting goods and home furnishings as online shopping sales continue to escalate.
However, despite the dire predictions, a number of stores have continued to adapt and grow and are opening new branches, and these include Walmart, Aldi, Lidl and Five Below to name a few. Therefore, retailers cannot afford to sit on their laurels in the next decade but must do everything possible to survive, including adapting to changes and customer preferences and incorporating online sales into their game plan.
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