In Brick-and-Mortar Retail, Nothing Lasts Forever (21)

In retail – the brick-and-mortar kind – only impermanence is permanent.

The body count mounts in terms of physical stores becoming ghost towns, where storefronts shutter, where malls scramble to become mixed-use spaces.

In the latest news, as students gather their backpacks and pencils fly off the shelves, as teens fret about fashion, one of the giants has fallen. As has been widely reported, Forever 21 is mulling bankruptcy. The company is known for selling relatively cheap fashion items at more than 800 stores globally. The stores are large, at roughly 20,000 square feet, and the industry is competitive, to say the least.

The numbers tell the story of a fizzle indeed. The larger picture, according to research from places like UBS, is that as many as 21,000 clothing stores out of a total roster of 82,000 (industry-wide) will shutter.

Bankruptcy might not necessarily mean total liquidation. But drilling down a bit, Forever 21 shows the rough and bumpy road of retail done through physical outlets. That’s especially true in the age of Walmart and Target, where omnichannel models have caught on nicely. For Forever 21, sales per square foot have declined from the mid-$100s a square foot to around $100 a square foot.

That could impact mall owners like Simon Property Group, which has 99 of Forever 21’s locations in its tenant roster. Simon’s management has said it might consider helping troubled retailers that are also renters, through direct investment. We may see that strategy put to a real test.

Meanwhile, the downdraft continues, and moving into suitors’ arms remains a strategy, too. Consider the fact that Lord & Taylor has been sold for about $75 million to Le Tote, a fashion rental subscription service. A brick-and-mortar icon goes the way of subscription service firm, a relative upstart – the times, they are a-changin’.

Sizzle

Costco in China: The U.S. retail chain opens its first location in mainland China, in Shanghai – and is such a hit with shoppers that it has to close early. The company cited “security concerns” due to crowding and now has begun limiting its daily shopper count to a couple of thousand.

Digital banking: Credit Suisse says it will invest hundreds of millions of dollars’ worth of Swiss francs into its digital banking efforts. The company says such efforts will cut the costs tied to operating brick-and-mortar branches.

APIs: Citi said its corporate treasury APIs and its CitiConnect API platform have processed more than $26 billion for corporate clients across 157 million API calls since its November 2016 launch.

Fizzle

Square: Square’s loss of a customer generates headlines and Wall Street gets nervous. As the payments processor reportedly lost the Danish company Joe & the Juice to Adyen, Wall Street is concerned about competition for larger sellers.

Danish banks: Negative rates persist. Sydbank and Jyske Bank both say a rate of minus 0.6 percent will be imposed on retail deposits bigger than $1.1 million.

UK SMBs: As if late payments were not causing enough harm to the U.K.’s smaller firms, news comes that SMBs lost nearly $11 billion to cyberattacks and fraud, among other negative events, as estimated by insurance broker Gallagher.