What’s the deal with all these retail closures?
This year was a rough one for some major stores. The reasons for this year’s more than 4,600 retail closures are varied, ranging from some operators closing underperforming locations to the bankruptcy of a major retail chain.
Merchants sometimes blamed rising theft for their rationale in closing some locations. But the sad reality is that several trends are weighing on brick-and-mortar businesses against the backdrop of the retail closures. Americans continue to shift towards online shopping.
Pharmacy chains have struggled with lower reimbursement rates and competition from Amazon and Walmart.
At the same time, dollar stores have fared better as inflation-weary consumers seek discounts or are cutting back on some purchases, such as electronics and jewelry. So, is your favorite store going out of business? Continue reading to find out!
Gap
According to Forbes, consumers are less interested in Gap’s apparel. They now consider it plain and overpriced compared to fast fashion brands like Zara.
Gap Inc. announced that it would shutter 30% of its namesake and Banana Republic stores in North America by the end of the year to have a healthier fleet of stores. The retail closure will move most of the stores out of malls.
President and CEO Mark Breitbard said in a statement that Gap has been overly reliant on low-productivity, high-rent stores. He said they were focusing on addressing the real estate problems and accelerating their shift to a true Omni-model.
The clothing conglomerate plans to open up to 40 more Old Navy stores and 100 more Athleta stores in the coming years.
Godiva Chocolatier
Unfortunately, there’s a bittersweet end for this Belgian chocolate maker, which closed all its brick-and-mortar stores across North America recently. Godiva had announced grand plans in 2019 to open up 2,000 new cafes worldwide, including over 400 in North America.
But COVID-19 completely destroyed its in-store foot traffic. And sadly, even after the pandemic, demand for the in-person shopping experience offered through Godiva’s locations has waned due to its acceleration of changes in consumers’ shopping behavior.
Don’t worry about this retail closure, though. You’ll still be able to grab your favorite truffles. The company still maintains its online presence and markets its products through retailers like Costco and Target.
The Children’s Place
The Children’s Place has been selling clothing for kids for more than 50 years. But parents stopped buying the latest fun fashions when so many were learning remotely.
The company cut down its “mall-based, brick-and-mortar portfolio” in North America after first-quarter financial results revealed net sales had dropped almost 40%. The situation hasn’t gotten better since the pandemic ended, either. It may lead to even more retail closures.
Best Buy
Despite a growth in online sales, Best Buy doesn’t seem to want to use that money to finance its brick-and-mortar stores. In fact, it has been gradually facing some serious retail closures.
In an earnings call in February 2021, Best Buy explained that it closed 20 locations in each of the previous two years and expected to close a higher number in the coming years. It also planned to add 2,000 part-time positions and laid off 5,000 employees.
The company said it’s trying to stay nimble by reducing the length of its lease terms, meaning that any future cuts could be abrupt.
JC Penney
This respected department store chain has been around for nearly 120 years but has suffered plenty of humiliations.
The company filed for bankruptcy in the early part of 2020, having endured years of declining sales before the lockdowns even started, and planned to close almost 30% of its locations.
That’s when mall owners Brookfield Asset Management Inc. and Simon Property Group pounced and bought JC Penney, saving it from financial ruin. Yet, a lot of retail closure are still happening at full speed ahead.
GameStop
A few years back, a legion of investing pranksters made headlines worldwide by sending GameStop’s stock to the moon.
But they didn’t stop there. The world’s largest gaming retailer has been shutting down hundreds of stores over the last couple of years, and recent hijinks haven’t changed their plans. The company was on track to close 1,000 locations by April 2021.
The company hasn’t made any significant announcements since then. But observers have reported more and more clearance sales nationwide, so the end isn’t near yet.
And even though the gaming industry was booming during COVID-19 due to people avoiding public spaces, the convenience of digital downloads has been a success, meaning GameStop is facing many retail closures.
Michaels
Crafty shoppers who kept an eye on the headlines could catch some heavily marked-down scrapbooking and art supplies in recent years.
And even though the arts-and-crafts retailer didn’t make any formal announcements, news outlets have reported many other retail closures nationwide, including in South Carolina and New York.
Then, in a turn of events after its stock price had bounced back from the worst of the COVID crash, Michaels retreated from the public markets, getting bought in a $3.3 billion deal with Apollo Global Management.
It’s the company’s second time to go private after being acquired by another firm in 2006 before going public again in 2014.
Fossil
Fossil Group, a watch and handbag designer known for brands like its namesake Fossil and Zodiac Watches, reported significant annual losses in recent years. And the truth is that it’s tough to keep acting like it’s business as usual after you lose $96 million.
The good news, though, is that the company plans to take advantage of lease expirations and up its store count by 15% to 20%.
That’ll allow it to strengthen its supply chain, improve inventory management, and “make Fossil a more agile, nimble and profitable company, avoiding retail closures.
At the same time, Fossil anticipates digital sales will make up most of its sales in the long run and is accelerating its online shift.
Are any of your favorite stores on this list of retail closures? Please feel free to share your thoughts with us in the comments section below. And if you liked this article, we highly recommend you also read: Top 10 Most Budget-Friendly Supermarkets in the US
