Welcome, perhaps, to the mauling of the Great American Mall.
The rise of eCommerce has been an inexorable one, and the retail landscape has shifted for retailers. The body count, so to speak, continues to rise – and begins anew, in a way, with the dawn of 2020.
The latest signs come from Macy’s, which in recent days announced a restructuring that will see the mall stalwart close 125 department stores and slash 2,000 jobs.
In a statement earlier in the week, Macy’s CEO Jeff Gennette said there is a “clear vision” moving forward, as Macy’s seeks to “fit into retail today.” Part of the revamp ties into a renewed focus on digital sales and on the company’s website.
On Tuesday (Feb. 4), Gennette emphasized that the company has a “clear vision” of how it will “fit into retail today” as he unveiled the restructuring plan. Shuttering 125 stores out of a current 680-store roster is significant – and Macy’s said it is targeting the “least productive” of that base. The news seems a bit of catchup, coming off a year that saw nearly 10,000 retailers close across the U.S.
Another mall casualty is the fast-fashion chain Forever 21, which filed for bankruptcy in September. The company said this week that it will sell itself for $81 million to several mall operators. The new owners seem to be betting that they can turn the store around.
The largest mall operator in the country, Simon Property Group, has said it thinks it can make money on the stores – and per management commentary, it is not simply looking to maintain its rent roll. Struggling space is better than empty space – but it may be a tough road with a company that has lost sales precipitously, going from $4.4 billion in 2018 to $3.3 billion in 2019. As reported in The New York Times, a pending restructuring could bring in $2.5 billion.
There are no easy fixes in the world of brick-and-mortar retail – and in the meantime, the body count accumulates.
Sizzle
ResTech and Mobile Commerce: Chipotle Mexican Grill reports a 13.4 percent jump in comparable restaurant sales in its most recent quarter, buoyed by digital sales that surged more than 78 percent. Management has said that digital capabilities have been expanded to 98 percent of the company’s store base.
Cross-border Remittance: WorldRemit announced a new partnership with Alipay that will make it easier for users to do cross-border transfers and make payments worldwide.
Music to Spotify’s Ears: The streaming music service registers a 29 percent jump in subscribers to 124 million, well in front of Apple Music at 60 million and Amazon at more than 55 million.
Fizzle
Peloton: After reporting earnings that showed increasing red ink on the bottom line, Peloton shares slide 12 percent. The company also says subscriber churn has increased to more than 2 percent.
IPOs: For at least one tech unicorn hopeful, it’s worse than anticipated. Casper, the sleep economy-focused eCommerce company, slashes its initial public offering (IPO) price to $12 to $13 from a range of $17 to $19. Investors clearly are unimpressed with top-line growth that does not have positive movement on the bottom line.
Coronavirus and the U.S. Economy: The impact of the ongoing pandemic continues to dent economic activity worldwide. Moody’s Analytics estimates that the U.S. economy can lose as much as $10 billion from a drop in Chinese tourism.
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