Store Closings in USA hits a record

[Ukiah]

I don't see the stores changing to adjust to the new trends. I think more closings are inevitable. We're living in a changing world.

[NorseThing]

As Macy's, JCPenney, Sears and other major department stores close their doors, the malls that housed those stores are facing a serious crisis.
That's because when so-called anchor tenants leave a mall, it opens the door for other stores to break their leases or negotiate much cheaper rent.




As one big store closes, it can take several smaller stores along with it like a house of cards. Experts predict that a quarter of American malls will close in five years -- around 300 out of 1,100 that currently exist.
Related: Mall owner Westfield sold for nearly $16 billion



"When anchor stores close, it causes big problems for mall owners and other retailers in the mall," says Howard Davidowitz, chairman of New York-based retail consulting and investment banking firm Davidowitz & Associates. "And I'd say this problem is only in its second inning."
Retailers often sign co-tenancy agreements in their leases with malls, allowing them to reduce their rent or get out of a lease if a big store closes.
That's because the smaller retailers next to anchor stores no longer benefit from the foot traffic that the major retailers received, according to Garrick Brown, vice president of retail research for Cushman & Wakefield.

http://money.cnn.com/2017/12/12/news...ing/index.html

A good point at the end of the quote. A chain reaction if an anchor closes due to the clauses in the small retailor lease agreements.

[dogukan]

https://www.forbes.com/sites/jeffrey.../#162c62cd58b5

At its peak in 1810 agriculture employed 84 percent of the workforce and 27 percent of the U.S. population. Even in 1900, agriculture represented 40 percent of the workforce. Today, only one percent of the workforce is in production agriculture. This huge loss of jobs was thanks to machines, machines that have allowed the labor productivity of farmers to increase by orders of magnitude. Those machines mean that one percent of the country can grow enough food to feed America and have one–quarter of their production left over for export to help feed the rest of the world.
Yet, somehow, this enormous outflow of jobs from agriculture did not lead to mass unemployment. That 83 percent of the workforce that got displaced found new jobs. Many of the jobs those leaving agriculture took in 1900 or 1950 were jobs that did not exist long before the jobs in agriculture disappeared. Some people even have jobs building, selling, and repairing the machines that replaced those agricultural workers.
Increased productivity thanks to machines means higher incomes. Higher incomes means higher spending. That spending creates new jobs, sometimes making new products or providing new services. In 1810 there were no baristas or plastic surgeons and in 2110 there will be new jobs that don’t exist today.

There is no guarantee that there will be new jobs just because that had been the historical case.
Most economists predict that as innovation have visibly slowed down at the frontier, new job creations might slow. In fact it already is having trouble catching up.

[NorseThing]

A new year and yes, just like professional sports, the end of the Christmas shopping season brings out the equivalent of the NFL Black Monday announcements. More store closings. Yes. And of course the usual suspects are still announcing more closures. This may not end until all of the shopping malls in the USA are closed. Who knew? Who knows? Who cares?

Well I do care.

The latest from Macy's:

Latest Macy's store closing news

Macy's will close nearly a dozen stores early this year, as part of a previously announced plan to trim the retailer's massive store fleet and cut back on expenses. About this same time last year, Macy's released more than 60 locations that would close in 2017, saying 100 total closures would take place over time. Eleven stores were officially added to that list Thursday. (See a full list of locations below.) Adam Jeffery | CNBC Macy's flagship store in New York. The department store chain said it's nearing the completion of 81 of the 100 planned closures, with the 19 remaining locations having yet to be announced. Since 2015, Macy's has closed more than 120 stores. The closures, along with other efforts, should help Macy's save as much as $300 million in expenses annually, starting in fiscal 2018, which will be reinvested back into the business, the company said. The closures will also result in about 5,000 job cuts. "While closing a store is always a difficult decision because of the impact on our customers, our associates and the community, Macy's is delighted to have served these communities over the years," a spokeswoman said in a statement. The Cincinnati-based retailer has said it wants to focus on its best real estate while investing more in its web operations, in a push to win more shoppers online. In recent months, foot traffic has also been steadily declining at many of America's less-profitable malls. Macy's shares have fallen more than 25 percent over the past 12 months, and the stock was down more than 3 percent Thursday on this news. The following Macy's stores are closing in early 2018. In most cases, clearance sales will begin on Jan. 8 and run for up to 12 weeks. Laguna Hills Mall, Laguna Hills, CA Westside Pavilion, Los Angeles, CA Novato (Furniture), Novato, CA Stonestown Galleria, San Francisco, CA The Oaks, Gainesville, FL Miami (Downtown), Miami, FL Magic Valley Mall, Twin Falls, ID Honey Creek Mall, Terre Haute, IN Birchwood Mall, Fort Gratiot Township, MI Fountain Place, Cincinnati, OH Burlington Town Center, Burlington, VT

https://www.cnbc.com/2018/01/04/here...sing-next.html

Sears also closing more and more

Sears Holdings, parent company of Sears and Kmart stores, told its employees Thursday that it will be closing more than 100 additional stores this year. That consists of 64 Kmart stores and 39 Sears stores, all of which are expected to shut between early March and April. "We will continue to close some unprofitable stores as we transform our business model so that our physical store footprint and our digital capabilities match the needs and preferences of our members," the company said in a statement. Sears wouldn't say how many of its employees would be impacted by the closings but did say the majority of the jobs are part-time positions, and eligible associates will receive severance. Liquidation sales will begin as early as Jan. 12 at the closing stores, Sears said. (See below for a complete list of the locations being shut.) About this time last year, Seritage Growth Properties, the real estate investment trust that Sears CEO Eddie Lampert spun off from the retailer, said in an SEC filing that the department store chain had exercised its right to terminate the leases on 19 unprofitable stores. This marked the second time Sears chose to shutter a chunk of the stores it sold off to Seritage in 2015. Since then, Sears has announced handfuls of additional closures and most recently unveiled plans to pay $407 million toward its pension plan in order to unlock and allow for the sale of 140 properties, though the company didn't define when those sales will take place. At the end of November, Sears reported a narrower net loss for its fiscal third quarter than it did a year ago, as the company pushes to return to profitability against a backdrop of vendor disputes and loans coming due. Meantime, the department store chain has been testing smaller store formats across the U.S., and in some cases moving to occupy a pint-sized portion of a bigger box, as mall operators redevelop their properties. On a recent call with analysts and investors, Sears CFO Rob Riecker said the retailer would be building on those new concepts in the coming months, "delivering specialized integrated retail experiences" to customers. Sears also recently started selling two of its brands, Kenmore and DieHard, on Amazon.com. Earlier Thursday morning, Macy's also revealed the locations of 11 stores that it will be closing in 2018 (nearing in on its previously announced plans to close 100 locations, beginning last year). The company has shuttered more than 120 locations since 2015, hoping that by whittling down its real estate portfolio it can focus on its best assets. With growing competition from online players and with more brands choosing to sell through their own platforms, department stores including Sears, Macy's, J.C. Penney and Kohl's have been forced to rethink their strategies: what inventory they will carry and how they will get it to shoppers. Sears shares have tumbled more than 60 percent over the past 12 months. The stock was falling close to 4.5 percent Thursday afternoon. Click here for a full list of Sears' latest round of closures.

https://www.cnbc.com/2018/01/04/sear...re-stores.html

Talk about a race to the bottom! I know that you need to close, retool, and in some way turn things around. I do not think these two icons of retail know how to do more than close stores though. As was mentioned in the Sears article -- more and more brands are choosing their own platforms rather than rely on the department chain stores for sales. It my be time to start spinning off brand names are independent companies -- in other words break the losers up in Trump speak!

[NorseThing]

The after Christmas sale is now on!! About20% of Toys R Us will closing the doors. Will it be enough to pull the chain out of bankruptcy? I doubt it unless there is also a bit of jiggering on the business model. Smaller and slimmer is not an answer to Amazon and other internet retail.

https://www.usatoday.com/story/money...es/1060674001/

Toys R Us late Tuesday filed court documents outlining plans to close up to 182 stores as part of its bankruptcy reorganization plans.
The company noted that some closings may be avoided if it is able to negotiate more favorable lease terms. But most of the stores listed in the documents are expected to close as Toys R Us tries to reinvent itself as a leaner, smarter retailer.
Going-out-of-business sales are scheduled to begin in February and be completed in April.

continue the story with the link above

[Basil II the B.S]

https://www.bls.gov/web/empsit/ceshighlights.pdf

Page 3, job creation by sector, retail -20%

Though economy wide, manufacturing and construction doing well are good news for Trump.

[NorseThing]

https://www.bls.gov/web/empsit/ceshighlights.pdf

Page 3, job creation by sector, retail -20%

Though economy wide, manufacturing and construction doing well are good news for Trump.

The current problem is that the growth of employment is in low paying retail and food industries. The retail sector is growth for employment and is also experiencing terrible disruption to existing models of bricks and mortar stores closing. Something will give here and it appears employment growth may be about to take a hit. As the economy resets itself to the next stage in the 21st century, manufacturing in the USA will need to take on even more importance. This is why it appears to my eyes that there is a bit of currency manipulation going on with the Treasury weakening the US Dollar exchange rate coupled with the high profile tariffs that are probably just window dressing to hide the currency manipulation.

[NorseThing]

A good summation of the problem is in the last half of this article: http://www.mlive.com/business/index....ear_detro.html

I will only quote a small portion here (go to the link for the rest, please)

But it's not just the bricks and mortar stores that are impacted by consumers' shift to online buying. Toy manufacturers recently learned they could sell directly to Amazon, eliminating the third-party sellers from the equation.
That's one of the devastating changes that forced this store to close, Zagrodzki said.
"The toy e-tailers on the periphery become casualties," he said. In the case of the Doll Hospital, that took place after it had purchased inventory for the busy holiday season, learning only later that some manufacturers were taking over the store's previous online niche.
The other change is more social, and it's one that all toy manufacturers and retailers will have to watch, he said.
"Kids are getting older faster," Zagrodzki said.
As a result, "the entire toy industry is under pressure," Zagrodzki said, noting the second bankruptcy of Toys R Us and this month's announcement that it would close 20 percent of its stores.
Is Amazon the bad guy?
"You can't say it's just Amazon," Zagrodzki said. "It's also Walmart, it's the giants that are causing the pressure in the toy industry.
"There's a shift away from imaginative, creative toys."
It a trend that will affect today's kids and their socialization, creativity and world view. Zagrodzki said. Electronic toys "do the thinking for kids."Both of those factors drove the closure of the Doll Hospital and Toy Soldier Shop.
"We had done everything we could to keep moving forward," Zagrodzki said. "... To adapt and overcome."
There's no end date for the closing sale. It will end, Zagrodzki said, "When everything is sold through."
He originally thought that could be as long as 11.5 weeks. Some product lines already are gone: Breyer Horses, Brio, puzzles. Games and books were close to gone last week, and Lego was running out. But there was still a range of Playmobile, baby toys, teacher supplies and, as one might suspect, dolls.
Discounts are 10 percent to 75 percent off, with many products in the middle of that. Full shelves stand next to empty ones, with all of the fixtures - and even the promotional items - bearing a price tag.
Consumers can learn from closings like the Doll Hospital and Toy Soldier Shop. Maybe CEOs can, too. Asked about Toys R Us CEO David Brandon's plan to turn that chain's remaining stores into showrooms staffed by experts and where kids can try out toys, Zagrodzki seemed skeptical.
"If it was truly that easy, that model would have worked here, too," he said.
He paused, then distinguished between buying and shopping. The first is easy online; the second loses its nuance and sense of discovery."There's something different at play here,' he said, noting that the online price isn't always lower. "It's about convenience."
The Parish family also owns the store's buildings, which are listed for sale for $1.25 million. A buyer will have the opportunity to redevelop property that once housed an anchor store along 12 Mile Road.
The family, too, will have the chance to reinvent how they spend their time.
"I've grown up here my whole, entire life," said Gildner, who worked one of two busy cash registers. "I don't know anything else."
As the store winds down, Kay Parish's descendants said they know they not only worked hard to build relationships with customers. They strategized and adapted, and that was worth the effort.
"We were a wonderful toy store for 70 years," Zagrodzki said.
He continued: "We're proud of the fact that we've hung on as long as we did."

[Basil II the B.S]

Yeah for instance Lego (of which I'm a big fan of) is having major issues as well, despite the fact they invested heavily in videogames and were arguably one of the pioneers of the gaming industry moving into videogaming.

I'm not hugely worried for retail in this case, rather than the impact of videogames becoming the only element of kids childhood as well as employment opportunities in the future industries. If Amazon automates everything, then we are in trouble.

[Gaidin]

All that and above. I'm an avid reader among other hobbies. I no longer have to sell books back once a year. I buy all the ebooks I want and save limited shelf space for the OMG AWESOME authors.

And it's not like we're in trouble just that retail is going through a massive game change. All this has happened before to other industries and not all companies survive or adapt.

[NorseThing]

“The company’s supply chain network is oversized relative to its national store footprint, and can be optimized by transferring operations to facilities in Lenexa, Kansas, and Columbus, Ohio,” JC Penney’s spokesman Carter English said in a statement.
Retailers such as JC Penney and rival Macy’s Inc (M.N) have been shutting stores and cutting jobs as customers increasingly shop online.

The distribution center will shut operations on July 1 and the customer care center on Sept. 1, JC Penney said.

https://www.reuters.com/article/us-j...-idUSKCN1FX2W5

Expect more of these announcements as each retailer with massive brick and mortar store closures needs to get the supply chain in line with current needs. I do not think even the Target and Walmart chains are immune to this.

[removeduser_487563287433]

http://money.cnn.com/2017/10/25/news...-story-summary

The internet is killing the bricks and mortar. I have no idea why they have not found a way to fight back. I would think the best marketing tactics would be to emphasize the ability to touch and feel the merchandise coupled with an internet presence to expand on additional colors and sizes. I would think even the Toys Are Us would have figured this out, but all retailers are struggling with the new competition.

Okay, well, think it through.

1) The cost of rent. Renting property, especially renting property with retail value (i.e. high footfall, busy central areas) is expensive. Running many such stores is astronomically expensive, and running a single e-commerce site is comparatively free. For many years now many retailers have in fact been property businesses, and the stores run by franchisees.
2) Staff. The cost of employing staff is very expensive, versus the cost of a limited CS staff for an e-commerce website. Indeed, many brands are now pioneering chatbots which can often be more effective and quick for servicing customers than staff themselves.
3) The value of stores themselves. You highlight the benefit of "touch and feel for the product". I have two different feedback points:
a) This is not how many retailers are seeing their customer journey unfold. Instead, customers have worked out how to abuse this system, with them going in-store to check out products, and then once deciding or making a short list, going online to find the same product for cheaper. I have just saved $500 on a new laptop and $100 on a new Garmin watch by doing exactly this.
b) In reality this just isn't worthwhile for many products. Consumer goods are all the same, whatever store you buy them from, and the only distinction is cost. Advertising products have made this even more obvious, with Google Shopping obliging advertisers to upload product SKUs so that users can immediately see if the exact same product is being advertised by another brand for cheaper. Even groceries are better bought online than in-store. Why? Because produce will be potentially fresher (as it has skipped a step of the logistical chain, and has not been sat in a store for x amount of time, less pawed over by other customers, and more convenient (delivered to your door, rather than drive to some busy supermarket with your screaming child and then having to lug around a week's worth of shopping). Fashion is fast going online, with companies like ASOS removing all anxiety by offering free returns. The only business I have encountered so far that does genuinely seem to still be actually skewed strongly to bricks and mortar stores is women's underwear, simply because different brands have different bra sizing and therefor women still want to get fitted in-store.

Physical stores are dead. This is probably great news, although many many businesses are about to go under. Such is the free market. But our town centres are about to be rejuvinated, with central areas losing their copy and paste chain shops, blighted shopping malls becoming worthless and freeing up large amounts of land to developed into affordable new housing, and restaurants and cafes and bars replacing the previously unaffordable areas, giving new community and life to high streets.

[NorseThing]

A good post Ferrets54! The problem that I see it is from a perspective that is at least over a half century in the making. I know of my home town that has had a dead and dying center for at least that long. The problem, at least in middle America is that the dead and dying buildings and areas are seldom brought back to life. We just move out onto more agricultural land and build new mistakes and new suburbs and new retail, cafes, etc. If we are lucky we do bulldoze the old and clear it out for the new, but it may take decades for even the simplest change.


For example a local bit that was actually obsolete about the time it was actually built -- Buckingham Square in Aurora Colorado. Built in 1970 as a mall and not on an interstate for highway access, it was truly a mall that in hindsight should never have been built.
http://www.deadmalls.com/malls/bucki...uare_mall.html

It took nearly 40 years for the mistake to finally be replaced. This is not even the worst real estate problems locally that took forever to be fixed. We have in the Denver metro area a number of building sites that had issues with radium processing and use from decades ago. Then there are smelting operations long since forgotten. I know that industrial problems exist all over the developed world, so my little corner is the least of the problems.

But the problem is not just real estate and what and where we live, it is also about jobs. I know in this Trumpist era that this seems to be an overblown danger by some, but people actually do need to be productive and useful and not in some mysterious Star Trek universe. Maybe it is just I am past my prime and change is difficult. Maybe I am worried too much about what has been to fail to see what is today.

My father was one of those GI's that went through Denver during WWII. He did not stay or return. Though many did do so.
http://extras.denverpost.com/snapshot/part2a.htm (worth a quick read)

Unlike many places in Europe, even Denver Colorado is a very recent mark of the planet as that article is about. So much of what I see here as a long running mistake to be corrected is really the result of very recent history. We had a governor -- Richard (Dick) Lamm that did not want the Olympics here because of the growth that would be created -- that was back with a much smaller Colorado than we have today. I doubt the growth did not come because Lamm was able to drive spike into the Olympic movement. It came anyways.

I am babbling like an old guy that I am now.

So I do appreciate your points in your post. I just see a future of uncertainty. I see less merit in a future tied to government jobs and that is what has fueled the local growth. I came from the rust belt with it's own problems. I will probably move to New Mexico with a whole new set of problems, but no excess of brick and mortar to tear out to make room for the next generation's mistakes.

[removeduser_487563287433]

A good post Ferrets54!

Thanks. I've been a digital advertiser in every continent except South America over the last nine years for several online and offline retailers, so I have a pretty good level of experience in both very-advanced and developing online markets.

The problem that I see it is from a perspective that is at least over a half century in the making.

Well, firstly, why is it a problem? At a guess you may be thinking jobs, but these jobs are notoriously worthless. They're either filled by children looking for pocket money or some sort of experience on a CV, or people in truly desperate poverty who are trapped into doing literally anything. Walmart employees for example work absurd hours in tedious roles with zero protection or benefits. These are not jobs worth saving, and Governments must not betray the people by pretending the large scale decimation of physical stores is not utterly inevitable.

I know of my home town that has had a dead and dying center for at least that long. The problem, at least in middle America is that the dead and dying buildings and areas are seldom brought back to life. We just move out onto more agricultural land and build new mistakes and new suburbs and new retail, cafes, etc. If we are lucky we do bulldoze the old and clear it out for the new, but it may take decades for even the simplest change.

This is a complicated issue with many causes but I don't think the vacation of retail space is an issue because practically every single western nation has a housing crisis. In cities and major towns it is up to local authorities to recognise the changing demand for this space and allow redevelopment into residential or recreational zones. I cannot speak to America but in the United Kingdom the development of agricultural and rural space (the green belt) is largely legally impossible - one of the reasons housing prices are becoming unaffordable for our generation, as the UK has similar restrictions on developing in density.

For example a local bit that was actually obsolete about the time it was actually built -- Buckingham Square in Aurora Colorado. Built in 1970 as a mall and not on an interstate for highway access, it was truly a mall that in hindsight should never have been built.
http://www.deadmalls.com/malls/bucki...uare_mall.html

It took nearly 40 years for the mistake to finally be replaced. This is not even the worst real estate problems locally that took forever to be fixed. We have in the Denver metro area a number of building sites that had issues with radium processing and use from decades ago. Then there are smelting operations long since forgotten. I know that industrial problems exist all over the developed world, so my little corner is the least of the problems.

Well you should be happy that the commercial reasons for these horrible developments is disappearing?

But the problem is not just real estate and what and where we live, it is also about jobs. I know in this Trumpist era that this seems to be an overblown danger by some, but people actually do need to be productive and useful and not in some mysterious Star Trek universe. Maybe it is just I am past my prime and change is difficult. Maybe I am worried too much about what has been to fail to see what is today.

I think I have covered my view above but yes, like every generation the jobs are changing and people must adapt, it is the way of the world.

But I will add this: it will get worse, and you cannot change this. My favourite example is this. 2% of the American workforce are employed as truck drivers. 2%. Just imagine how many people it is. Now imagine all the people employed in jobs that rely wholly or in part on those jobs existing. Motels. Roadside restaurants. Mechanics. Fuel stations. Now imagine all the dependents these people have.

Now consider that the reality is that self-driving vehicle technology already exists, right now. Consider that in the coming decade the remaining technical and legal barriers are going to be overcome. And then know that logistics companies will have a choice: will they continue to employ 2% of Americans, who require a salary, healthcare, pensions. Who , who eat, who sleep. Who make mistakes, and kill people, and total vehicles and cargo. Or will they invest in a self-driving lorry, that will travel 24/7, drive more efficiently, and never crash.

You know the answer to this. You know it can't be stopped. And what you don't know is that this is only one example of one job that will be destroyed by automation, but practically all jobs are vulnerable to it.

This is why the most intelligent Governments (i.e. Finland) are already experimenting with national income.

My father was one of those GI's that went through Denver during WWII. He did not stay or return. Though many did do so.
http://extras.denverpost.com/snapshot/part2a.htm (worth a quick read)

Unlike many places in Europe, even Denver Colorado is a very recent mark of the planet as that article is about. So much of what I see here as a long running mistake to be corrected is really the result of very recent history. We had a governor -- Richard (Dick) Lamm that did not want the Olympics here because of the growth that would be created -- that was back with a much smaller Colorado than we have today. I doubt the growth did not come because Lamm was able to drive spike into the Olympic movement. It came anyways.

I am babbling like an old guy that I am now.

So I do appreciate your points in your post. I just see a future of uncertainty. I see less merit in a future tied to government jobs and that is what has fueled the local growth. I came from the rust belt with it's own problems. I will probably move to New Mexico with a whole new set of problems, but no excess of brick and mortar to tear out to make room for the next generation's mistakes.

You see a future of uncertainty only because you're not yet willing to accept the changes that are here, now. I don't know how old you are but I am 31. I graduated in 2008, the beginning of the Great Recession. My reality is that my job will probably not exist long enough for me to reach retirement, even if I am financially secure enough to retire at what you would consider a retirement age. I have no pension. I own no house. My (relatively cheap) rent is 18% of my (relatively high) salary, for my girlfriend it is over a third - we are both very successful professionals. I am an economic migrant, living in a country for tax breaks in order to save enough to build an investment portfolio for my retirement and hopefully save enough for a deposit for a house... if I go home.

I don't have the luxury to worry about disappearing shops. It's a trivial symptom of what is about to happen.

What is about to happen is one of humanity's great economic revolutions. We are on the eve of the AI revolution. And you will absolutely be alive to see it, it's happening now.

[NorseThing]

@Ferrets54 -- thanks for the response. I admit that was more rant than I should have posted.

In a more serious vein---

I am concerned that our concepts of development may be misdirected. Not the profit motive of the investors, but the signals our government gives via rules, regulations, and probably a good old boy network for election. We have pretty much let the developers run the candidates, the elections, and the laws that encourage the development that we see today. I have seen businesses close. I was actually hired once in dim past to help with one such industrial closure that affected many families that had worked in the plant for several generations. When these closures are the result of technology moving forward, I think seeing the problems and effects should not mean discouraging the technology or the resulting changes. It is still sad to experience this in the first person. Your point about trucking is spot on in this regard. The transformation of America's highway system in the 1960's and 1970's is related to your point as well. Still the improvements were to some degree ill thought out due to how government approached the problem. The shuttering of the JC Penney distribution center that I posted was expected by me for about 5 years based on my relatives in the area and some other information I had. That the closure took this long is probably management's desire to not disrupt so many lives. Decisions being kicked down the road until they cannot be avoided is common and not just for the politicians.

Thanks a gain for two great post here.