Last year, national retailers closed more than 9,000 stores and, according to a January 24 USA Today report, the door shutting isn’t done. A group of national retailers that includes Pier 1 Imports, J.C. Penney, Macy’s, Express, Papyrus and Bed Bath & Beyond have announced plans to close over 1200 stores. Changing consumer behavior and digital commerce competition are major factors in these big name retail struggles.
Cost Cutting Strategy
A clothing retailer with an approximate market value of $313 million, Express says it is closing 100 stores as a part of an overall cost cutting effort. Nine stores have already been closed, with 31 more to follow by the end of January 2020. Store closures are expected to be completed by 2022, with a goal of reducing costs by $80 million per year for the next three years. CNBC News attributed an 18 percent increase in Express shares to news of the closure plan.
Pier 1 Imports also cited cost cutting, along with a need to reduce stores while shifting to an omni-channel retail focus. The national retailer expects to close approximately 450 retail stores and will also close some of its distribution centers. Macy’s, planning 28 store closures, is also focused on cutting costs and making digital commerce moves. Established in 1858, the 162-year-old retailer is doing surprisingly well as it expands into e-commerce and restructures its business operations to adapt to a changing marketplace, though Macy’s isn’t out of the woods yet.
Financial Constraints Hamper Change
Not every retailer has the resources available to transition into more competitive modes. Another old-timer, established in 1893, Sears is expected to be down to 182 stores in February. That’s a big comedown for a retailer that was once the biggest on the planet. Constrained by poor financial condition, including a 2018 bankruptcy, Sears is in a bind. It lacks the resources it needs to make the sort of changes necessary to be competitive in today’s retail environment.
J.C. Penney is also struggling to stay relevant and competitive. This retailer is continuing to close stores, with six more closings planned, along with a call center closing. In trying to reshape itself to appeal to today’s shopper, J.C. Penney has sustained enormous losses. It also carries a large amount of debt. Unable to find its footing, hampered by financial struggles, J.C. Penney lacks the agility essential for retail success today.
Adapting To Changing Consumer Demands Essential
Accustomed to the ease of the online shopping experience, shoppers are less patient with brick and mortar inconveniences. They don’t want to deal with out of stock items, no sales floor help and long check-out lines. If consumers are going to take the trouble to go to a retailer, they want more than just products. They can get those from home with no traffic and parking hassles. They want a personalized experience. M&Ms stores are an example of that, with a visually appealing wall of individual candy colors for mixing your own batch and stations to custom imprint the candies. For retailers, the best chance of success lies in having the agility and adaptability to change with the times.