A wave of major store closings this year is poised to reshape the nation’s shopping emporiums, as longtime — and in some cases, obsolete — merchants such as Radio Shack shutter most of their doors.
Meanwhile, a new breed of online merchants is taking the brick-and-mortar plunge and coming to a mall near you.
Although the U.S. retail vacancy rate fell to 6.1% in the fourth quarter of 2014 from 6.6% in 2013, 2015 will be a whole other story, according to a research note from Dana Telsey, CEO of Telsey Advisory Group, a brokerage and retail consultancy, citing data from commercial real estate firm CoStar.
That’s because a large swath of retail space will open up as hundreds of stores go dark in the nation’s malls this year.
Based on TAG’s report, store closings this year among the old guard include Radio Shack 1,784 closures; Wet Seal, 338;
Meanwhile, Struggling Sears Holdings is working to raise more than $2 billion in cash by spinning off up to 300 of its stores into a real estate investment trust by June. (Toward the end of last year, the retailer closed 234 Sears and Kmart stores.)
Not to mention clothing retail Chico’s, which will shutter 120 doors and even Macy’s, which is doing relatively well, will close 14 stores.
“The rapidly changing consumer purchasing patterns have forced retailers to relook at their business models, from store-fleet size to shopping apps,” according to “A Deep Dive Into The US Store Landscape,” a report by Fung Business Intelligence Centre, the research arm of the Hong Kong-based multinational Fung Group, led by Deborah Weinswig, executive director and head of global retail and technology.
It’s no secret that the U.S. landscape has been chronically overstored for years. For example, “the US has nearly 40% more retail square footage than its Canadian neighbors to the north,” the FBIC report said. Compounding that is double-digit e-commerce growth, which is eating into consumers' shopping trips.
But a fresh crop of online-only merchants are expected to make their mall debuts this year, building on a trend that gained momentum in 2014, as beauty subscription service Birchbox, for example, opened a store, while hot e-commerce eyewear shop Warby Parker opened more stores.
Expect more online-turned-brick-and-mortar retailers, such as TOMS, which, for each pair of shoes sold, donates one to a needy child; Rent the Runway, which rents out chic apparel and accessories; and menswear merchant Bonobos to become a larger mall presence this year, according to “The U.S. Mall Outlook,” a report from real estate analysis firm Green Street Advisors.
Even the biggest e-commerce retailer of them all, Amazon, is rumored to be making its physical store debut this year.
Stay tuned.
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