Retail

Department Store Closures Expected To Tick Up As Brands Try To Recapture Revenue

To get back the type of productivity they knew a year ago, experts are saying department stores nationwide will need to close as many 800 locations – or about 20 percent of all anchor retail stores in the U.S.

Those closures are not exactly evenly spaced — Sears is looking at 300 locations (43 percent of its stores) — to put it back on track to be earning per square foot what it was bringing in in 2006.

“Department stores used to be a great catchall for different brands, but today many of the brands have stores of their own, and shoppers can also find them online,” said DJ Busch, a senior Green Street analyst.

Sears is not alone. J.C. Penney and Macy’s are also collectively staring down hundreds of closures.

Department store sales average $165 per square foot in 2015, a 24 percent drop over 2006. And stores, it should be noted, have already been shrinking during that time period, according to Green Street’s estimates physical footprints have declined about 7 percent over the last decade already.

And while some analysts are advising a more aggressive closure schedule, particularly out of retailers like Penney’s that have closed comparatively few stores despite calls for more aggressive liquidation, some retailers have pushed back, noting that shrinking a physical footprint isn’t as easy as just moving all that consumer traffic online to a website.

“There’s a misperception out there that when we close a store, that business transfers online,” Ed Record, Penney’s chief financial officer, told analysts in November. “When we close a store, particularly in a small market, we see our dot-com business go down.”

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