Collector - January 2018 - 12
Retail Apocalypse: Separating Fact From Fiction
Recent research aims to dispel the popular gloom-and-doom forecast.
re you seeing a lot of "clearance
sale" or "going out of business" signs
these days? That might be because
the stores of former retail giants seem to
be dwindling in malls across the country.
RadioShack, Sears/Kmart, JCPenny and
Macy's all announced store closures in 2017.
One prominent U.S. retailer, Toys R Us,
which has more than 1,600 stores worldwide,
filed for Chapter 11 bankruptcy protection
in September to restructure the $400 million
debt it owed to vendors and creditors.
It joined Aerosoles, Rue21 and Payless
ShoeSource, which also declared bankruptcy
in 2017 and announced store closures.
The media has dubbed this sudden
decline of formerly powerful retailers as
a "retail apocalypse." But does this spell
the end of brick-and-mortar retailers as
we know it? A recent research report from
IHL Group aimed to dispel the gloom-anddoom forecast.
The research firm noted that for every
one retailer closing stores, 2.7 retailers
opened stores in 2017. In fact, U.S. retailers
opened 4,080 new stores in 2017 and plan
to open over 5,500 more in 2018.
"Retail sales are up $121.6 billion in the
U.S. through the first seven months of 2017.
Now let's put that in perspective: $121.6
billion is the equivalent of the annual retail
trade of the Netherlands," said Greg Buzek,
president of IHL Group. "The negative
narrative that has been out there about the
death of retail is patently false."
The IHL Group report found that 16
chains account for nearly half of the total
number of stores closing, and five of these
chains (Radio Shack, Payless ShoeSource,
Rue21, Ascena Retail and Sears Holdings)
represent 28 percent of the total stores
closing. Meanwhile, 42 percent of retailers
reported a net increase in stores and 43
percent reported no change in net stores.
"Without question, retail is undergoing
some fundamental changes. The days of
'build it and they will come' are over,"
Buzek said. "However, retailers that are
focusing on the customer experience,
investing in better training of associates
and integrating IT systems across channels
will continue to succeed."
Online commerce has fundamentally
changed the way consumers interact
with retailers by allowing more options
for shoppers to choose from. A study
released by The NPD Group showed
online shoppers planned to spend 70
percent more than their brick-andmortar counterparts during the 2017
Time will tell if brick-and-mortar retailers
can adapt to the changing consumer
preference toward online shopping or if we
will see more of those "clearance sale" signs
posted in front of their stores.