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.”

——————————–

Latest Insights:

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. In the December 2019 Mobile Card App Adoption Study, PYMNTS surveyed 2,000 U.S. consumers for a reveal of the four most compelling features apps must have to engage users and drive greater adoption.

Click to comment

TRENDING RIGHT NOW