Time May Be Up for These Retailers
Those not lately living under rocks know that retail in the United States is going through some fundamental changes. This isn’t the first time retail models have shifted, and it won’t be the last, but this is one of the most noticeable and impactful shifts in recent memory. That malls that dominated American commerce for generations may soon become a thing of the past. Many stores have already closed, and thousands more are set to be shuttered in the coming years.
Recently, Sears officials said they weren’t sure how much longer this American institution would be able to keep its doors open. Generations of Americans did all their shopping through the Sears catalog, then their kids and grandkids grew up loving Kenmore and Craftsman and other iconic brands. These, too, may be on their way out. The Illinois-based retailer already put its most popular labels on the auction block, and it has recently announced planned closures to more than 100 Kmart locations and 42 more Sears stores … and that’s just the beginning.
But Sears is far from alone in this…
JC Penney already announced plans to close 138 stores by this summer. That means the company will still have about 900 locations … but no magic bullet to put them back on a profitable basis.
Macy’s, too, is struggling, having announced plans to shutter nearly 70 locations, leaving it with 700 other stores … and desperate hopes to right the ship.
Popular mall retailer Abercrombie & Fitch announced plans to shutter about 60 stores in the coming year, which will bring the total closures up to nearly 200 since 2014. Competitor American Apparel filed for bankruptcy protection for the second time in about a year last November. The brand plans to close all of its remaining 100-plus locations soon.
Women’s fashion label Bebe is said to be “exploring strategies” to find alternatives to its current business track. The brand operates 137 stores nationally. Another mall store, The Limited, closes all 250 remaining locations. Back at the height of its popularity, The Limited boasted almost 400 locations nationwide.
Popular teen retailer Wet Seal is also closing up shop, with plans to liquidate its remaining 171 locations this year.
Now, it needs to be said that mall stores have been known to come and go. For every Gap or Banana Republic, there’s a Chess King, Gadzooks, Merry Go Round or Hot Topic. As styles come and go, brands that ride trends will fade. But that’s not all that has doomed many of today’s mall retailers.
Consumer trends are killing malls. Through the 80s and 90s, malls were anchored by department stores and music stores. The former have been struggling in recent years, and the latter all but disappeared. Peaches? Sam Goody? Most of them are gone. Then there are the bookstores like Waldenbooks and toy stores like KB, both killed off largely by internet sales.
Based on current consumer tastes and continuing trends, it doesn’t look like people are going to give up getting deals online, so if smaller retailers and mall stores are going to survive to thrive again someday, they need to find a new business model that works better for everyone.
William Doonan is a tax law and legal expert in New York.
