'Twas the weekend before Christmas and all through the mall,
No shoppers were shopping – no shoppers at all! That's right it's the last shopping weekend of the Retail Apocalypse and there are 9,302 less places to shop than there were last Christmas as that's the amount of store closings this year. Thousands more store closings could be on the way in the coming years as online shopping continues to replace purchases at physical stores and eat into retailers’ profits. High debt levels and rent have also burdened traditional retailers.
Payless, Gymboree, Charlotte Russe and Shopko all filed for bankruptcy and closed a combined 3,720 stores, according to Coresight. The majority of those were because of Payless, which filed for its second bankruptcy in February and shuttered 2,100 US stores. Discount chain Fred’s filed for bankruptcy in September and closed 564 stores. Forever 21 also filed for bankruptcy that month and said it will close up to 178 stores. Forever 21’s closures are not in Coresight’s report since they are not finalized. Other retailers, such as Ann Taylor parent Ascena Retail, Family Dollar, GNC, Walgreens, Signet Jewelers, Victoria’s Secret and JCPenney, slashed their store footprints to save money and prop up higher-performing stores. Family Dollar closed 359 this year, while Signet, the parent company of mall stalwarts Kay, Jared and Zales, announced 159 closures.
According to UBS, Online Sales are currently 16% of Retail Sales and will rise to 25% by 2026, which could, in turn, force up to 75,000 additional stores to close, including 20,000 clothing stores and 10,000 consumer electronic stores. Moody's lowered its outlook on Department Stores heading into the holiday season but it shouldn't affect things much as retailers like Macy's (M), Kohls (KSS), Gap (GPS) and L Brands (LB) are already in the bottom 20 of the S&P 500 in 2019 performance.
As you can see on the chart – it's not so much that ECommerce has really LOWERED the amount of shopping at malls as it has, very clearly, killed its growth. Stores are closing, in large part, because the ambitions of the Retailers exceeded the reality of their ability to add sales over time…