‘Retail Apocalypse’ Now: Analysts Say 75,000 More U.S. Stores Could Be Doomed.

from WaPo

Widespread closures have roiled the retail industry, but many more stores are likely to shut down in coming years to keep up with a shift to online shopping, according to a report by investment firm UBS.

An estimated 75,000 stores that sell clothing, electronics and furniture will close by 2026, when online shopping is expected to make up 25 percent of retail sales, according to UBS. Roughly 16 percent of overall sales are made online.

Analysts said the closures would affect a broad variety of retailers, affecting an estimated 21,000 apparel stores, 10,000 consumer electronics stores and 8,000 home furnishing stores.

Already this year, retailers have announced plans to close thousands of stores as they keep up with changing consumer habits. Payless ShoeSource, which filed for Chapter 11 bankruptcy protection in February, is closing all 2,100 of its U.S. stores, while Gymboree is shuttering its 800 locations. Sears, which has closed 1,300 Kmart and Sears stores since 2013, is scrapping an additional 80 locations. A number of other retailers, including Gap, have hinted that store closures are on the horizon.

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8 Responses to ‘Retail Apocalypse’ Now: Analysts Say 75,000 More U.S. Stores Could Be Doomed.

  1. Nicholas Meyerback April 26, 2019 at 11:25 pm #

    Retail has taken a substantial blow in the last decade. The trend is apparent in the closings of thousands of store locations as online shopping has taken the wheel. By the end of the first quarter of 2017, there were nine retail bankruptcies. 2016 was not kind to retail either, representing the acceleration of a decade-long trend that took off. The phenomenon isn’t limited to “mom and pop” stores, with the backbone of American retail feeling the heat. Sears and Macy’s have closed more than 1,000 stores, joining the likes of J.C Penny, RadioShack and more who experienced quadruple digit closures. Some were not as lucky to escape bankruptcy. Payless announced bankruptcy in early 2017 and plans to close its 2,500 North American locations.

    The cause seems to be the simple fact that traditional retail can’t keep up with ecommerce. Amazon has sprung to the fore of ecommerce in the last decade. The company demands nearly 50% of all online retail sales in America. Bezos’s giant has taken advantage of the trend. Around 15% of all retail sales now occur online. Brick and Mortar has been the victim of the shift to ecommerce. With any industry in an evolving economy, corporations must evolve or be left in the dust.

    Target appears to be adapting. In 2017 Target was at a crossroads after a disastrous 2016 sales report. Target decided to embrace ecommerce while steadfastly standing by the Brick and Mortar stores that drove their initial success. Nearly a thousand stores were completely remodeled to include more private level brands. What made the revamp so lucrative was the ingenious idea to coordinate the physical in-store upgrades to be compatible with ecommerce. Target stores now serve as a delivery option for online orders. Target grants consumers the liberty to choose from a number of delivery tiers ranging from house delivery to in-store pick up. A neighborhood Target can be a distribution center where consumers can decide to continue shopping. It’s like a giant check-out aisle where the entire store is for sale instead of just candy and drinks. Surprisingly enough, the strategy reduces fulfillment costs. A decrease in fulfillment costs and an increase in store traffic yielded positive results for the retail company. The plan worked. Target reported its best year in a decade and saw 5% growth.

    Target’s approach serves as an example for retailers facing a grim future: get creative.

  2. Kevin Metz May 3, 2019 at 8:11 pm #

    These past few years, the rise of reliance in technology has made the online marketplace extremely popular. Whether it be a company such a Amazon having pretty much every type of item you can think of, or a retail store allowing the option to order things that are out of stock in their physical stores, consumers have grown to love the convenience of online shopping. This article shows the number of stores that are shutting down, or companies declaring bankruptcy due to this rise of popularity. This apocalypse is causing companies to be forced to expand their distribution channels to an internet-based system. An effect of this revolution that I thought of while reading through the article is the decline in importance of physical currency. If majority of todays shopping and transaction will be through websites, credit and debit cards will be needed more than ever. Sure you’ll need cash for food, supermarkets and what not but we thought the same thing about buying clothes and electronics 10 years ago. I believe due to this rise of internet shopping, physical currency will be made a thing of the past and you will be paid from your employer directly to your bank account, you will be forced to pay with credit or debit when in physical stores and pocket change will be a thing of the past. This will also cause for our government to have to spend less money on actually producing the currency and will help our banks get more attention because everyone will be needing to go through them for transactions.

  3. Jessica May 30, 2019 at 7:45 pm #

    Two years ago, I worked my first retail job, which turned into a retail nightmare, so I can understand where the term “retail apocalypse” comes from. We live in a society where convenience is key, and that doesn’t prove well for retail stores. So many stores have begun to integrate technology into their sales tactics, that it will eventually make brick and mortar stores obsolete. When I started my job, the most important part of my job was to capture customer information as they checked out, so they could receive future promotions from us and we had a way of contacting them. The store I worked in focused on creating long lasting relationships with customers by styling them in store and getting to know them so they would come back every season and shop with us. Eventually, this expanded and we were told to send additional styles to the customers via email, so they could purchase items online. This eliminates the need to come into the store at all and also minimizes the need to create a relationship with them in store. We also had the ability to order items we didn’t have in stock for customers right from our registers, which to me is the beginning of an era where there are only a number of physical stores, with one of each size of each style merely for the purpose of trying on. Once the customer found their size, we could order it and have it shipped right to them. There were styles we would receive only one size run in, and that’s what would end up happening. If that becomes a reality one day, that lessens the need to have so many stores widespread around the state. As mentioned in the article, stores are leaning towards more stream-lined displays with less inventory, pushing the customer to shop online. The online retail experience is killing stores because of its ability to offer convenience through shipping and the shopping experience itself. People won’t have to rifle through clothing racks or wander up and down aisles wondering where the item they’re looking for is. While this is beneficial to customers, the retail apocalypse is detrimental to retail workers. If so many locations are closing because the online experience is taking precedence, the need for workers isn’t there and they are left to fend for themselves, all in the name of convenience. I don’t agree with the article saying that “this is a healthy cleansing for the retail industry”, as these store closings affect many workers, even though for the company the benefit to closing doors is there. It can be assumed that the article is considering this apocalypse from a business standpoint, however there are many societal implications that should be considered as well.

  4. Eric Greene May 31, 2019 at 10:01 pm #

    With the widespread revelations of technology in the past 10 years, online retail commerce has skyrocketed dramatically. The market for online retail commerce per household has risen 50% over 2017 to 2018 with an average of $5,200 spent per household. It goes to show that increasing traffic of online sale is beginning to take a toll on brick and mortar stores. In a world that is fixating on the ease of use in combination with quick delivery times and increasing online marketing, it is a time of change amongst the consumer body. With the rise of Amazon, making 10.1 billion in 2018 alone, the U.S. Department of Commerce stated that online consumers spent a total aggregate of 513.61 billion in online sales in 2018. Proving that the traditional brick and mortar structure is losing efficiency in the newer age of markets with increasing online retail sales. This trend can be seen with the recent closing of toys-r-us, and their company filing for bankruptcy. Once a titanic of the brick and mortar industry, toys-r-us is another casualty of the growing online commerce industry. Being that brick and mortar retail stores have closed more than 15,000 stores since 2017, the apparent trends in the current consumer basis are obvious for retailers that making a stronger presence in online retail commerce will be more rewarding than focusing efforts in brick and mortar stores.

  5. Matthew Wolf May 31, 2019 at 10:59 pm #

    It is sad to see that retail companies that have been around for decades are closing their doors. I agree with the article where it says that Americans are doing more shopping online but I don’t agree where it says that it’s the main reason why the shift of retail stores closing is because of online shopping. I believe that is a reason but not the main reason. I believe why retail stores like Kmart, Sears, Toys R Us, Payless, amongst others are closing because they don’t sell products online well or it is difficult to order products online. I believe that if these companies focused on their online presence to consumers, these companies may not all be gone.
    I’ve worked in retail since 2015 for two different companies. The first company I worked for was Lowe’s Home Improvement where I worked in Internet Fulfillment. My job was pretty simple, go on a computer, see what products our customers bought online, get that product from the sales floor and ship it out. Many days those online sales made up most of our profits.
    The second company I currently work for is Hot Topic and they do their online sales where customers can order products online in the store and they can pick up the product in the store when it comes in and it includes free shipping to the store. That brings in customers into the store that can be interested in more products in the store when they pick up their item(s). Also the individual stores gets credit for the online sales.

  6. Samantha Begley June 3, 2019 at 6:49 pm #

    During the busy holiday seasons, I can tell first hand that retail stores are beginning to see this so called “apocalypse”. Considering that generationally people prefer convenience over experience many people prefer finding their holiday gifts on sites such as Amazon or stores that offer online shopping. Ever since Cyber Monday began and many second day delivery online business’s opened, such as Amazon, it seems as though that people will choose these options rather than paying for gas to go to their local retail stores. Due to this apocalypse many retail stores offer less of a variety in their inventory and it seems that shelves are beginning to look empty, loosing that desired interest many customers go out and seek while shopping.
    Overall 75,000 retail stores that sell clothing, electronics and furniture are closing which seems to be directly affected by the numerous amounts of products Amazon offers households. People will prefer to look up anything they would like to order by Amazons easy to navigate website and widespread search anywhere from clothing, to even electronics and more. Better yet not only is the selection great, but also the products are usually well made which gives consumers the ideal shopping experience. Due to past buyers rating their purchases from anywhere between a one star to five-star rating along with a detailed description of their satisfaction, consumers are influenced in what they are purchasing before they even check out. This provides even more of a better shopping experience than people would get in a retail store. Furthermore, Amazon market gives consumers another convenient way to shop providing direct shopping for food and dry goods, if households have busy parents Amazon market provides them to order their groceries and have them sent the next day if they did not have the time to go out to their local grocery store.
    Overall the apocalypse of retail stores I believe is happening not only due to online shopping becoming more desirable but also because of the availability providers such as Amazon gives to consumers. Amazon provides convenience, easy to use shopping experience, and consumer rated opinions which gives the desire to shop online more than shopping in retail stores.

  7. Madison Becker June 5, 2019 at 12:57 pm #

    Some might say that Amazon is taking over the world, because it has become more than online shopping but they have begun to purchase other chains and currently own 41 subsidiaries including IMDB, Zappos, and Alexa. Generations have slowly begun to rely and only shop online due to a multitude of reasons. It is more than just Amazon affected by this change, as other companies are affected but in a less positive way. Companies like Sears, Gap, and Payless have all hinted at bankruptcy or have already filed and analysts have noted online shopping as one reason why retailers cannot keep up with changing consumer habits. These companies are notable chains, so this change is not limited to “mom and pop” stores that are suffering. I can even admit that I am guilty of ordering everything online. As a student, it is much easier to have things shipped to me than to leave my room and plan a day at the store. I am sure that is how many people think, but catered to their needs. I am sure busy working adults would rather have things sent to them then take the time out of their day to go out. This is why the consumer habits are changing and modeling the changes happening in technology, as the easier it becomes to use the internet, even for the older generations, the more we will use it.
    Companies are adapting to this change as well. They are making their products available for online orders as well, though they will never be competition to the evergrowing Amazon, they are adapting nonetheless.

  8. Brandon Medici June 6, 2019 at 3:26 pm #

    Over the past few years, brick and mortar stores have been declining in sales because online retailers like Amazon have becoming more popular every day. Over the past few years, brick and mortar stores like Payless, Toys R Us, and Sears have closed their stores because they couldn’t make enough money and they couldn’t compete with online retailers with their low prices and two-day shipping. I agree with the author that the average U.S household spent approximately over $5,000 last year shopping online, which was a 50% increase from 5 years ago because consumers find it convenient to be able to shop from the comfort of their home, shop from anywhere 24/7, and don’t have to worry about paying expenses like gas. Lastly, since online stores are becoming more popular and brick and mortar stores are closing as a result, because of this people came up with the term “retail apocalypse”.
    I agree with Madison Becker that brick and mortar are trying to adapt to this change by putting their products online to try to compete with online stores like Amazon, but with Amazon growing more every day, brick and mortar stores can’t compete with them. Also, Amazon offer things that brick and mortar stores can’t offer like low prices, two day shipping, and even free shipping on products that is over a certain amount of money because they want to attract more customers so they can make more money. Lastly, various brick and mortar stores do compete with Amazons and other online retailers, but some of them were forced to close because they couldn’t compete with online retailers and as a result, they couldn’t increase their sales.

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