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Online shopping and ecommerce is driving a record-breaking number of brick-and-mortar store closures in 2017 and killing malls at the same time.
The retail industry is struggling and a new report from Credit Suisse estimates that there could be more than 8,640 store closures in 2017. More and more, people are choosing to shop online for convenience, selection and price. Department stores and mall staples are taking the hit hardest.
For some perspective, in 2008, at the depth of the credit crisis recession, approximately 6,200 stores closed. That was the highest number of store closures on record and CS reports that 2017 outpaced that figure in the first quarter. In addition to a consumer shift to online shopping, stores are also dealing with the reality that they had too many stores and shopping centers to begin with.
Even those that offer online shopping and free shipping continue to suffer on their bottom line. Online shopping is generally less profitable for retailers, who face additional shipping, technology and consumer acquisition costs.
Malls in particular continue to be transformed by the closures. Rue21, Abercrombie and Fitch, Wet Seal and BCBG have all announced massive closures. Bebe and the Limited are shutting down all of their locations. On the department store side of things, Macy’s is closing 100 of its 730 stores and Sears and Kmart are closing 150 while also announcing doubt that the company can survive at all. JCPenney announced it was closing 138 stores, but good first quarter sales have postponed the closures to July.
American Apparel is closing all their remaining stores, Payless has declared bankruptcy. Staples and even CVS are closing 70 stores each.
Ecommerce has transformed the retail landscape and there’s no indication the industry’s new giants, like Amazon, will show any mercy. Online shopping is incredibly convenient and it would be hard, if not impossible, to convince people to go back to shopping in brick-and-mortar stores. Still, the economic toll is going to be real. The companies shuttering stores will vacate nearly 140 million square feet of retail space. Not to mention the layoffs that will leave thousands unemployed with rapidly irrelevant work experience.
