Reports of 'Retail Apocalypse' Greatly Exaggerated

BY REBEKAH MARCARELLI

Published: 10:21 AM August 30, 2017

 

 

U.S. retailers are opening 4,080 more stores in 2017 than they are closing and plan to open over 5,500 more in 2018, according to a new research report from IHL Group.
The research reviewed over 1,800 retail chains with more than 50 U.S. stores in 10 retail vertical segments. It found that for every chain with a net closing of stores, 2.7 companies showed a net increase in store locations for 2017.
"The negative narrative that has been out there about the death of retail is patently false," said Greg Buzek, president of IHL Group. "The so-called 'retail apocalypse' makes for a great headline, but it's simply not true. Over 4,000 more stores are opening than closing among big chains, and when smaller retailers are included, the net gain is well over 10,000 new stores. As well, through the first seven months of the year, retail sales are up $121.6 billion, an amount roughly equivalent to the total annual retail sales of The Netherlands."*
According the the research, the total net increase of stores for 2017 is 4,080, including retail and restaurants. Core retail segments will see a net gain of 1,326 stores, while table-service and fast-food restaurants are adding a net of 2,754 locations. In total, chains are opening a net 14,239 stores and closing 10,123 stores. 42-percent of retailers have a net increase in stores, only 15 percent have a net decrease, and 43 percent report no change.
The three fastest growing core retail segments are mass merchandisers such as off-price retailers and dollar stores (+1,905 stores), convenience stores (+1,700 stores) and grocery retailers (+674 stores). The research also shows specialty apparel retailers are seeing the largest number of closings, with a net loss of 3,137 stores. Yet, for every chain closing stores, 1.3 chains are opening new stores.
When it comes to chains shuttering stores, only 16 chains account for 48.5 percent of total number of stores closing.  Five of these chains (Radio Shack, Payless Shoesource, Rue21, Ascena Retail and Sears Holdings) represent 28.1 percent of the total stores closing.
"Without question, retail is undergoing some fundamental changes. The days of 'build it and they will come' are over," added Buzek. "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."