Retail’s Fizzling Store Count

Retail shopping bags

Perhaps at this point it might  be better to ask which retailers, if any, are not shuttering stores.

The data came this week from Coresight Research that store closures across the U.S. continue to mount, touching more than 7,150 locations announced by a slew of firms thus far into 2019. And, of course, we are not even through the second quarter of the year. The pace already dwarves the 5,524 closures that were seen in all of 2018, as tracked by the same firm. That was down 30 percent from 2017, when store closures totaled 8,139 locations.

The company also said there have been 2,726 openings this year, indicating that the shift has been decidedly to the dark side — as in stores going dark.

The trade war may or may not accelerate that pace, according to some observers, and there are some longer term, permanent structural changes in place. We’re talking, of course, about eCommerce. Companies like Dressbarn are going completely out of business, with 650 locations. Party City will close 45 locations. Each firm that has announced closings has its own set of problems, looking for the right mix of tangible goods and sales done with clicks of a mouse or tap of a screen. Kohl's, for example, said same-store sales were down 3.4 percent even as digital sales were up double-digit percentages. Pier 1 Imports has said it is closing 45 stores and could close 15 percent of its entire base if it does not meet operating targets.

Beyond that, pressures mount from the geopolitical back and forth of a trade war and tariffs between the U.S. and China (and now, other nations such as Mexico). As noted in CNBC, UBS analyst Jay Sole said in a note that as 25 percent tariffs are in place for a range of goods imported from China “the market is not realizing how much brick & mortar retail is incrementally struggling and how new 25 percent tariffs could force widespread store closures. ... We think potential 25 percent tariffs on Chinese imports could accelerate pressure on these [companies’] profit margins to the point where major store closures become a real possibility.”

For now, as tariffs go, so will retail — and the clouds are still gathering.


Erica: That’s a lot of digital assistance. Bank of America said this week that Erica, its artificial intelligence (AI)-powered virtual assistant, has surpassed a few significant thresholds, with 7 million users and 50 million client requests. The firm has also doubled the ways consumers can ask questions, to 400,000.

Big deals: Further confirmation that big payments players in payments want to get bigger … in the third announcement centered on a deal worth tens of billions of dollars, Global Payments and TSYS have agreed to a $21.5 billion merger, focusing on financial institutions and merchants.

CBD’s leap into mainstream? CBD firms have said in the past that (lack of) access to mainstream financial services and basic banking has stymied progress. Now Square is launching a beta program aimed at accepting at least some CBD companies for payments processing.


Amazon suppliers: The guessing game is on. Bloomberg reports that Amazon is seeking to cut costs, “purge” some smaller suppliers, and reduce reliance on bulk orders. Amazon says it is reviewing relationships on a case-by-case basis, a standard practice that remains unchanged. But other reports state the eCommerce giant has not renegotiated annual terms with smaller vendors. Uncertainty reigns, and for smaller companies reliant on Amazon, uncertainty is less than optimal for healthy planning (or top lines).

Apple Card: One vote of no confidence for the tech giant’s consumer-focused credit card (with Goldman Sachs)  comes amid reports that Citi had backed away from supporting the card. The reason? Doubts that the card would be profitable.

Chinese tourism: A casualty of the ongoing trade war, Chinese travel to the U.S. has fallen for the first time in nine years, down 5.7 percent in 2018. That may spell trouble for high-end retailers who rely on such cross-border visits to sell handbags and other luxury items.



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