As more consumers are turning to online marketplaces like Amazon to get their shopping done, American retailers are closing their doors at a record pace.
According to Bloomberg, while high-end stores are still performing well, the Class C and D shopping centers are suffering. Some of the latest casualties include Payless, which recently filed for bankruptcy and announced plans to close 400 locations; Ralph Lauren, which is shutting down its flagship Fifth Avenue Polo store; and teen-apparel retailer Rue 21, rumored to be filing for bankruptcy sometime this month.
“It’s an industry that’s still in search for answers,” said Noel Hebert, an analyst at Bloomberg Intelligence. “I don’t know how many malls can reinvent themselves.”
Credit Suisse Group AG analyst Christian Buss reports that year-to-date store closings are already outpacing those of 2008, when the country was at the peak of a recession. There have been 2,880 closings announced so far this year, compared with 1,153 for this period in 2016. It’s estimated that there could be 8,640 store closings in 2017, higher than the 2008 peak of about 6,200.
Already in 2017, HHGregg Inc., Gordmans Stores and Gander Mountain Co. have entered bankruptcy. RadioShack filed for Chapter 11 for the second time in two years, while other companies like Sears, Macy’s and J.C. Penney have announced store closures outside of bankruptcy court.
Of course, all of these closings will have an impact on retail space, with more than 10 percent of U.S. retail space, or nearly 1 billion square feet, needing to be closed if the estimates prove to be right. And the Labor Department figures released last week show retailers cut around 30,000 positions in March, which was the same total as in February and marked the worst two-month showing since 2009.
In the meantime, some retailers are focusing on eCommerce. Kenneth Cole Productions announced late last year that it was closing almost all of its locations to focus on online sales, while sources say Bebe Stores Inc., a women’s apparel chain, is planning to take a similar approach.