How might the department store business be fixed?
By closing hundreds of its businesses.
That’s essentially the finding of a new study by real estate research firm Green Street Advisors.
As The Wall Street Journal shares, Green Street estimates that, for U.S. department stores to return to their productivity of a decade ago, approximately 800 such retail locations — equal to one-fifth of all anchor space in the country’s malls — would need to be shut down.
“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,” commented DJ Busch, a senior Green Street analyst.
Breaking things down chain by chain, as it were, Green Street’s data indicates that, to match their respective sales-per-square-foot rate from 2006, Sears would have to close 300 (43 percent) of its stores, JCPenney would have to shutter 320 (31 percent) of its locations, Nordstrom would have to close 30 stores (25 percent) and Macy’s an additional 70 — or 9 percent of its locations (with WSJ noting that the latter chain has a head start in that regard after closing 40 stores last year).
WSJ adds that, although none of the aforementioned retailers commented specifically on Green Street’s findings, some have recently indicated an aversion to the mass closure strategy to right their respective ships.
“There’s a misperception out there that when we close a store, that business transfers online,” Ed Record, JCPenney’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.”
Meanwhile, a spokesman for Nordstrom told WSJ that all of its stores are profitable, and shutting down locations “is not our normal practice.”