‘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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2 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.

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