Brick-and-mortar shops and retail chains are closing at a record rate, and there’s no sign the decline will stop, The Wall Street Journal reports.
In the first four months of 2017, retailers have announced a total of 2,880 store closures, and some financial services firm Credit Suisse predicts that around 8,600 stores will close this year. That’s more than closed during the financial crisis in 2008, and twice the number that closed in 2016.
Several smaller stores will shutter all or most of their mall and free standing stores this year. Clothing chain Rue21 announced April 17 that it will close 400 of its 1,100 stores nationwide. Bebe, which sells “unique, sophisticated and timelessly sexy” women’s clothing, will close all of its 168 physical stores nationwide by the end of May, the company announced Friday.
Smaller retail chains are closing the most physical locations, but retail giants are also scaling back. JC Penney will close 128 of its 1,000 locations, Sears plans to close 41 of 695 stores, and Kmart plans to shutter 109 of 735 stores, WSJ reports.
The holiday shopping season in 2016 gave retailers some of the best sales figures in recent years, but much of that came from internet sales, where the profit margins are lower than physical shops due to shipping and technology costs. (RELATED: Retailers Are Crushing It This Holiday Season, Posting Best Numbers In Years)
The convenience of online shopping is a big reason for declining store sales, but retailers also misread the markets in the past few years, opening more stores than their businesses could sustain.
“Thousands of new doors opened and rents soared” after the retail sector’s boom in the late 1990s and early 2000s, Richard Hayne, CEO of Urban Outfitters said. “This created a bubble, and like housing, that bubble has now burst.”
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