From The Motley Fool:
Are there enough stores for retailers to close to offset the impact of Amazon.com?
Macy’s announced last month it identified 100 stores it will close in a bid to offset six straight quarters of declining comparable store sales. The reduction equates to 12% of its store base and exceeds the combined number of store closings the retailer has initiated over the last six years.
Where some companies like Sears Holdings probably don’t even have enough stores in its portfolio to close to offset the damage being done, others don’t seem to fully appreciate the threat they face and aren’t doing enough to sufficiently offset the Amazon effect.
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Retail remains “overstored” with too many locations that can’t support declining customer traffic. According to data compiled by the industry watchers at ShopperTrak, retail store foot traffic has plunged 57% between 2010 and 2015, and shoppers are checking their mobile devices before making a purchase.
Some in the industry seemingly don’t want to accept the notion that many of their stores aren’t needed. Instead of closing locations, they’re just reducing their size.
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But there is a dramatic reduction coming in the number of stores that will be open.
- Office Depot has closed 400 stores as of the end of its second quarter and will be closing 300 more over the next three years.
- American Eagle Outfitters will close 154 stores through 2017.
- Barnes & Noble is closing 10 stores this year and 223 stores by 2024.
- Chico’s FAS will close 120 stores thru 2017.
- Children’s Place will close 200 stores by 2017.
- Gap is closing 35 stores this year.
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Malls are not the draw they once were and department stores have lost their ability to attract customers. Real estate research firm CoStar reports annual department store retail sales have tumbled 28% since their peak in 1999, and revenues have slid every single year except one to end 2015 at $165.5 billion.
All the while Amazon.com is getting stronger, recently reporting its third consecutive quarter of record profits by generating $857 million in earnings on sales of $30.4 billion.
Link to the rest at The Motley Fool