From The Wall Street Journal:
American retailers are closing stores at a record pace this year as they feel the fallout from decades of overbuilding and the rise of online shopping.
Just this past week, women’s apparel chain Bebe Stores Inc. said it would close its remaining 170 shops and sell only online, while teen retailer Rue21 Inc. announced plans to close about 400 of its 1,100 locations.
“There is no reason to believe that this will abate at any point in the foreseeable future,” said Mark Cohen, the director of retail studies for Columbia Business School and a former executive at Sears Canada Inc. and other department stores.
Through April 6, closings have been announced for 2,880 retail locations this year, including hundreds of locations being shut by national chains such as Payless ShoeSource Inc. and RadioShack Corp. That is more than twice as many closings as announced during the same period last year, according to Credit Suisse.
Based on the pace so far, the brokerage estimates retailers will close more than 8,600 locations this year, which would eclipse the number of closings during the 2008 recession.
. . . .
The seeds of the industry’s current turmoil date back nearly three decades, when retailers, in the throes of a consumer-buying spree and flush with easy money, rushed to open new stores. The land grab wasn’t unlike the housing boom that was also under way at that time.
“Thousands of new doors opened and rents soared,” Richard Hayne, chief executive ofUrban Outfitters Inc., told analysts last month. “This created a bubble, and like housing, that bubble has now burst.”
. . . .
As retailers rushed to expand their physical footprint, the internet was gearing up to do to apparel companies what it had already done to booksellers: sap profits and eliminate what little pricing power these chains commanded.
Despite the view that shoppers prefer to try on clothing in physical stores, apparel and accessories are expected this year to overtake computers and consumer electronics as the largest e-commerce category as a percentage of total online sales, according to research firm eMarketer.
Helena Cawley, 37 years old, said she used to be a “die-hard” department-store shopper. But with two small children, the Manhattan entrepreneur doesn’t have time to visit physical stores the way she once did. “I buy much more online now,” she said. “With free returns and free shipping, it’s so easy.”
Link to the rest at The Wall Street Journal (Link may expire)
As PG has mentioned before, he takes no joy in bookstore employees or anyone else losing their jobs. However the rapid and continuing reduction in the number of bookstores is part of a very large trend throughout physical retail.
By reason of its high density, mass transit options and (for many) high incomes, Manhattan should be almost the ideal location for physical retail to survive. In many parts of the island, billions of dollars in personal wealth are within a ten-minute walk of a store.
If online shopping is becoming more attractive than physical stores in Manhattan, traditional retail will have an even more difficult time in less densely populated urban areas.