Retail apocalypse

A Kmart in Lancaster, Ohio closed in 2016

Retail apocalypse refers to the closing of a large number of American retail stores beginning in 2016.^[1] Over 4,000 physical stores are affected as American consumers shift their purchasing habits due to various factors, including the rise of e-commerce.^[2] Major department stores such as J.C. Penney and Macy’s have announced hundreds of store closures, and well-known apparel brands such as J. Crew and Ralph Lauren are unprofitable.^[3] Of 1,200 shopping malls across the US, 50% are expected to close by 2023.^[4] The retail apocalypse phenomenon is related to the middle-class squeeze, in which consumers experience a decrease in income while costs increase for education, healthcare, and housing.

History

Sears closed over half of its stores in the 2010s

Since at least 2010, various economic factors have resulted in the closing of a large number of American retailers, particularly in the department store industry. Sears, which had 3,555 stores in 2010, was down to just 1,503 as of 2016, with more closures scheduled.^[5] Sears also owns the retail chain Kmart Corporation, which operated 2,171 stores at its peak in 2000,^[6] a number that has since dwindled to less than 750 with further closures planned.^[7][8]

The term "retail apocalypse" began gaining widespread usage in 2017 following multiple announcements from many major retailers of plans to either discontinue or greatly scale back a retail presence, including companies such as H.H. Gregg, Family Christian Stores and The Limited all going out of business entirely.^[9] The Atlantic describes the phenomenon as "The Great Retail Apocalypse of 2017," reporting nine retail bankruptcies and several apparel companies having their stock hit new lows, including that of Lululemon, Urban Outfitters, American Eagle.^[10] Credit Suisse, a major global financial services company, predicted that 25% of U.S. malls remaining in 2017 could close by 2022.^[11]

Affected retailers

The following retailers have all either closed or announced plans to close large numbers of retail locations during the time period known as the retail apocalypse and in some cases gone out of business entirely.

American Apparel had not made a profit since 2009,^[12] and filed for chapter 11 bankruptcy in 2015^[13][14][15]

• On July 13, 2017, Alfred Angelo bridal stores shuttered all locations with little advance notice. Frustrated customers were handed bankruptcy forms after walking away empty-handed.^[16] The company's corporate offices were abandoned and stores across the United States emptied and shuttered, but the store's official website remained active, with no reference to the closure.^[17]
• The retail division of The Andersons, a conglomerate based out of Toledo, Ohio, announced in January 2017 it would close its remaining stores in the state. The stores closed in June 2017 after 65 years of service. ^[18]
• On June 12, 2017, Ascena Retail Group announced that will close at least 250 stores under its brands and a further 400 may close unless lower rents for their existing locations can be arranged. Ascena is the owner of several clothing brands: Ann Inc., Lane Bryant, Loft, Dress Barn, Maurices, Justice and Catherines.^[19]
• American Apparel will close all of its stores, a total of 110, in April 2017 after being acquired by Gildan Activewear. 2,400 workers were laid off.^[20]
• Bebe announced plans to close all stores and focusing online only. At its peak, Bebe operated a total of 312 stores, but by March 2017, this was down to 172.
• Family Christian Stores, going out of business entirely, is closing 240 stores.^[9]
• GameStop has announced plans to close at least 150 stores following reports of weak earnings and a grim prediction of sales for 2017.^[9] GameStop has been affected by a shift in consumer purchasing habits of games as makers have made it easier to purchase titles online for download, often through consoles, requiring no physical disc.^[21]
• In March 2017, Gander Mountain, an outdoor recreation retailer, announced that it was filing for bankruptcy and would likely close stores. In May 2017, the retailer announced that it was closing all 126 of its locations. However, CEO Marcus Lemonis then indicated that certain flagship stores, particularly in Michigan, might remain open depending on deals with store landlords and rental rates.^[22] It was later clarified that likely around 70 stores would remain open, even those currently running liquidation sales, possibly as Camping World, which acquired the company.^[23]
• Also on June 12, 2017, Gymboree announced that it has filed for bankruptcy protection and will close from 375-450 of its 1,281 stores. Gymboree had recently refused to pay some bills and had over 1 billion dollars in debt. Although the store has an online presence, only 21% of its sales come from online ordering, with "dated and unsupported" web systems.^[11]
• hhgregg, which filed for bankruptcy in March 2017, announced that it would close all 226 of its remaining locations in April 2017 after having previously announced plans to close 88 in March.^[9]

• JCPenney announced on February 24, 2017 that it will close 138 stores in 2017. However, on April 13, 2017, Penney reported plans to delay these closures due to strong sales that were apparently a result of better-than-expected sales and traffic due to customers coming in and supporting the stores following the announced closures. Liquidation sales will now start May 22, and stores will close July 31, six weeks later than the initial closure date scheduled.^[24]
• In April 2017 Kit and Ace closed all its stores in the US, focusing on e-commerce and its 9 Canadian shops.^[25]
• The Limited filed for bankruptcy, went out of business and closed its remaining 250 stores.^[9]
• Macy's plans to close at least 68 stores and also will eliminate more than 10,000 jobs.^[9]
• On May 11, 2017, Marsh Supermarkets announced that they were filing for Chapter 11 bankruptcy protection and that if they did not find a seller in 60 days, they would close their remaining 44 locations.^[26][27] Marsh eventually found buyers for 26 of its 44 stores. The remaining 18 will be liquidated and closed and some of the other 26 will also be liquidated, as only the buildings were purchased, but not the stores' stocks of inventory.^[28]
• BCBG Max Azria announced the closure of its stores in 2017 and going to department stores and online only. BCBG Max Azria Group filed for Chapter 11 bankruptcy protection on February 28, 2017 and was taken over by Marquee Brands and Global Brands Group.^[29]
• MC Sports closed all stores in 2017 as a result of bankruptcy.
• Michael Kors is closing 100 to 125 of its standalone stores.^[30]
• Payless ShoeSource filed for bankruptcy in April 2017.^[31]
• RadioShack filed for bankruptcy in March 2017 and plans to close 552 stores. This is the second time in two years that the company has filed for bankruptcy.^[9]
• rue21, in April 2017, announced plans to close around 400 stores.^[32] It filed for Chapter 11 Bankruptcy on May 16, 2017 ^[33]

• Sears Holdings, the parent company of Kmart announced plans to close approximately 150 Sears/Kmart stores total.^[34] The retailer, as part of required reporting, stated to the Securities and Exchange Commission that it had substantial doubt that any of its retailers could continue to survive. Such a report is typically considered damaging to a company, as it affects their supply line.^[35] On April 20, 2017, Business Insider reported that the company was "quietly closing" more stores than it had initially announced and compiled a list of ten additional Sears and Kmart locations that were closing.^[36] On April 22, Sears also announced plans to close 50 of its auto centers and 92 pharmacies within Kmart locations.^[37] On June 6, 2017, they announced that an additional 72 Sears stores would be closed.^[38] On June 23, they announced the closure of a further 18 Sears stores and 2 Kmarts.^[39] On July 7, 2017, the further closure of 43 KMart and Sears stores was announced, including the final KMart location in the Dayton, Ohio region following the closures of stores in suburbs such as Trotwood, Englewood and Beavercreek.^[40] In a blog post, Sears Holdings C.E.O. Eddie Lampert stated "more closings are coming."^[41]
• Teavana announces closing 379 stores, with the rest to follow in 2018 citing lower mall traffic.^[42]
• On July 12, 2017, True Religion announced the closure of 27 stores as a result of Chapter 11 Bankruptcy
• In March 2017 Urban Outfitters’ CEO Richard Hayne compared the American retail scene to the 2008 housing-market collapse that plunged the US economy into a deep recession.^[43]
• Vanity, a mall clothing store based in Fargo, North Dakota closed all of their stores by April 2017.
• Wet Seal filed for its second bankruptcy in January 2017 and announced plans to close all its stores, which numbered 171 at the time.^[44]

Factors

The main factor cited in the closing of retail stores in the retail apocalypse is the shift in consumer habits towards online commerce.^[45] Holiday sales for e-commerce were reported as increasing by 11% for 2016 compared with 2015 by Adobe Digital Insights, with Slice Intelligence reporting an even more generous 20% increase. Comparatively, brick-and-mortar stores saw an overall increase of only 1.6%, with physical department stores experiencing a 4.8% decline.^[46] Another factor is an over-supply of malls,^[47] as the growth rate of malls between 1970 and 2015 was over twice the growth rate of the population. Despite this, mall visits declined by 50% between 2010-2013 with further declines reported in each successive year.^[48] A third major reported factor is the "restaurant renaissance," a shift in consumer spending habits for their disposable cash from material purchases such as clothing towards dining out and travel.^[10] Another cited factor is the "death of the American middle class," resulting in large-scale closures of retailers such as Macy's and Sears, which traditionally relied on spending from this market segment.^[49]

See also

• Dead mall
• Amazon.com
• Experience economy
• Generation Z
• Economic history of the United States
• Middle-class squeeze

External links

• Dead Mall Series on YouTube

References