As we reported a year ago, over 20 major retailers made announcements of mass store closures in 2016. As 2017 rolled on, 37 major retailers shared closure plans with the public. One after another…almost as fast as you can “buy now with one click”, the effect of Amazon and e-commerce is now the elephant in the room for most bricks and mortars.
And here we are, a week into February and there have already been 4 major retail store closure announcements in 2018.
The below infographic is a good visual representation of the gravitas of the matter. In the first months of 2017, 9 retailers announced total or majority store closures. There are at least 19 bankruptcy filings associated with the closures. And many reports are showing that more locations will be on the chopping block soon.
Why is this Happening?
One reason has to do with debt and private equity purchasing chain retailers and then loading them up with unsustainable debt (Bloomberg).
The other, more talked about reason is the change in how the consumer shops. From the consumer perspective, retailers should put the customer at the center of their business by understanding the unique landscape in which they compete. What do we mean by this?
Put yourself in the consumer’s shoes.
Why, as a consumer, would I purchase from your store and…
- Sit in traffic
- Wait in line
- Deal with unfriendly/unhelpful associates
- Do all of these things again in case of a return
…when I can do all of the above from the comfort of my couch online?
The answer can only be ‘yes’ when:
- The conversation with your associate is so valuable, everything else is justified (think about training your staff using a service like Experticity)
- Your store provides an experience that makes the other factors worthwhile (i.e. Home Depot offers DIY classes; Ulta Beauty offers a Brow Bar;)
- There is a level of customization that can only be achieved in person (high tech fitting rooms; tasting experiences at grocery stores; furniture display models that can be sat on;)
What moves people to buy has changed. Customers have the power. And the retailers who haven’t caught on to this phenomenon have paid the price. The first step is understanding the options the consumer has, and making sure you are the best one.
What Does This Mean for Brands?
As CNBC reports, when retail chains are in trouble they resort to excessive discounting. This has caused brands to begin limiting their inventory or terminating the relationship all together.
When chains close a substantial amount of stores, the brands suffer because the market becomes awash in excess inventory, leading to major discounting. Consumers become comfortable with the reduced pricing, which makes it much harder for the brands to maintain standard pricing.
In the long run, closures lead to write downs and reduce a brand’s exposure, limiting the number of touch points a consumer might have with their products. In short, this has an immense effect on brands.
How Can Brands Avoid the Same Fate in an Amazon World?
Unfortunately, in an increasingly brand agnostic world, brands could face the same fate if they are unable to reinvent themselves around the customer. This starts with having an in-depth comprehension of what the consumer wants, and the choices they have. It ends with meeting and exceeding those expectations in all areas so that a brand stands out as the clear winner.
Brands Who are Winning with Consumers:
- Adidas listened to customer feedback about street style and released its NMD (‘nomad’) design, a key driver of growth.
- BARK has always put the customer first. When they started offering private label products through Target, they negotiated that all customer questions be directed to their customer service team, so that they could ensure happiness.
- Apple preempts the consumer’s needs by giving them what they want, before they know they want it. This fosters brand loyalty unparalleled in today’s environment.
- Lego regularly solicits product ideas from its customers. If an idea receives 10,000 votes, the company will consider creating a product around it.
- Nintendo recognizes how much its customers love nostalgia. Couple this with a little friendly competition with Pokemon Go and they have a powerful way for consumers to connect with their brand.
How to Benchmark the Consumer’s Options
Again, our recommendation for brands is to understand the landscape and be the best option for the consumer.
One of the most underrated, “low hanging fruit” ways to benchmark the landscape is by measuring the feedback found in consumer product reviews. By collecting and measuring reviews a brand can benchmark performance against its competitors in the post-purchase experience.
Once the brand understands the post-purchase experience stacked against that of the competition, they have a good predictor of how the product will do when consumers conduct comparative research in the evaluation phase. A brand can use these post-purchase insights to uncover market opportunities, fix product problems and make business decisions that put the customer at the center of their business.
Product reviews are the gateway to understanding and making decisions around the consumer. Learn how to start aggregating yours.
More Details: 52 Retailers with Announcements of Mass Closures in 2016-2018 (to date)
- The Finish Line — Despite the boom in ‘athleisure’, the footwear company announced in January that it would be closing 150 of its 617 stores.
- Tailored Brands (Men’s Wearhouse/Jos. A. Bank) — In March, following a worsening sales trend, the company announced it would begin to shutter 250 of its 1500 retail stores nationwide.
- Hancock Fabrics — After failing to find a bidder to keep the company running, the fabric retailer announced in April of 2016 that it would close its remaining 185 stores.
- Sports Authority — In May, the company filed for Chapter 11 bankruptcy and announced closure of all 460 stores.
- Aéropostale — After filing for Chapter 11 bankruptcy in May, the company announced closure of 113 of 739 U.S. locations.
- Ralph Lauren — In June, the company announced closure of 50 of its 493 stores in a bid for profitability.
- Abercrombie & Fitch — After closing 200 stores in four years, the company announced it would close 60 of its 744 U.S. stores in August of 2016.
- Macy’s — In August of 2016, Macy’s announced it would begin closing 100 of its 728 stores.
- Office Depot — After closing 400 stores and a plan to merge with Staples fell through on antitrust concerns, an August announcement stated that an additional 300 of 1,513 North American stores would close.
- CVS — As part of a savings initiative the company announced in December that it would close 70 of its 9,600 stores.
- Sears/Kmart – In December of 2016 they announced an additional 30 of its 1,500 locations would close, although it has shuttered 2,000 locations since 2010.
- American Apparel — After filing for bankruptcy for the second time in November of 2016, Gildan Activewear has purchased the brand’s assets, but not its stores. In January they announced that all 110 stores would be closed by April.
- Wet Seal — In January, the teen retailer put out the notice that all 171 stores would be closing.
- BCBG Max Azria — In January, the mid-priced fashion company announced it would close 120 of its poorest performing 570 stores. In June, however, two companies purchased BCBG, with a plan to keep the retail footprint small (45 U.S. stores).
- The Limited — In January, the women’s apparel chain began closing all 250 stores in the United States.
- MC Sports — In February, the midwest sporting goods chain announced it was filing for bankruptcy and planned to shutter doors of all 66 stores.
- Family Christian — Citing declining sales, the Christian-themed retailer closed all 240 stores in February.
- HH Gregg — after an unsuccessful search for a buyer, the company filed for bankruptcy in March to close all 220 stores.
- Radio Shack — After filing for bankruptcy in March, 1,000 stores had been closed by Memorial Day, leaving a meager 70 Radio Shack stores in America.
- Gordmans Stores — The discount retailer filed for Chapter 11 bankruptcy in March and will close all 106 stores in 22 states.
- GameStop — In March, plans to close 100 of 6,600 stores were announced.
- Guess — In March the fashion company announced it would pull the plug on 60 of 400 retail stores in the United States, with up to 120 additional stores on the chopping block for 2018.
- Crocs — in March, the clog maker announced it would close 158 of 558 stores.
- Eastern Outfitters – In April, the company sought a bankruptcy court’s approval to close 48 of its 86 stores.
- Rue21 — In April, the chain revealed plans to close up to 400 of 1,218 stores.
- Payless Shoesource — The company filed for Chapter 11 bankruptcy in April with a plan to close 400 stores, and then in June announced it would close a total of 800 of the original 4,000 stores.
- Bebe — All 180 stores would be closing as it focuses on online business, the company announced in April.
- Vera Bradley — In conjunction with a plan to focus on licensing of home products, Vera Bradley said in May of 2017 that it would close 50 of its 111 stores by 2021.
- Michael Kors — In May it was announced that between 125 of 827 stores would close in the next two years.
- American Eagle — Following years of closures, in May, the apparel retailer announced closure of 37 of its 1,053 stores.
- Staples — On the heels of 248 closings in the last two years, the company announced an additional 70 closures in May, out of 1,559 locations in U.S. and Canada.
- Gymboree — after filing for bankruptcy in June, the company named 350 of its 1250 stores that would close. In October, after shedding $900 million in debt, Gymboree exited bankruptcy.
- Lululemon’s Ivivva — In yet another online-move, Lululemon’s tween brand Ivivva announced in June that it would close 40 of 55 stores.
- Ascena Retail Group (Dress Barn, Justice, Ann Taylor Loft, Lane Bryant) — in June, the group revealed plans to shutter up to 667 of its 4,850 stores if it can’t negotiate lower rents.
- True Religion — after filing for bankruptcy protection, plans to close at least 27 of 140 stores were announced in July.
- Alfred Angelo — Brides-to-be everywhere had a collective fit in July when the bridal store announced they would close all 60 of their stores and declare bankruptcy.
- 2nd Time Around — In July, the luxury consignment store announced it would close all 30 locations, and they did not pay out some sellers.
- Sears/Kmart — Another round of closures as 330 of about 1500 stores were closed this year.
- Perfumania — after filing for Chapter 11 bankruptcy in August, announced plans to close 64 of 226 stores and then take the company private.
- Vitamin World — after filing for bankruptcy in September, in November, the chain announced plans to close 122 stores while keeping 150 open.
- Last Call by Neiman Marcus — In September, the off-price retailer said it would close 10 of its 37 Last Call stores.
- Benny’s — The 93-year old Rhode Island retailer announced in September that all 31 stores would be closed by the end of the year.
- Aerosoles — In September, the footwear brand announced bankruptcy and closing of 74 of its 88 retail locations.
- Walgreens — In October, at the same time that it purchased 2,000 Rite Aid stores giving it a combined total of over 10,000 locations, Walgreens announced it would close 600 locations.
- Bare Minerals — In November, the Tokyo-based company said it would close 100 of its 209 stores to refocus the brand.
- J Crew — In late 2017 they announced plans to close 50 stores by the end of January.
- Teavana — owner Starbucks announced it would close all 379 stores, until a judge ruled they must honor 77 leases in December.
- Charming Charlie — In December, Charming Charlie announced it was filing for bankruptcy and closing 100 of 370 stores.
- Sam’s Club — In January of 2018, partially in an effort to compete with rival Amazon, the warehouse store announced it would close 63 of 597 clubs.
- Sears/Kmart — In its third time on our list, after a poor holiday season, Sears Holding Company announced 103 additional closures of its remaining 1,104 stores.
- Toys R’ Us — As part of its bankruptcy filing, the children’s retailer announced closures of 175 of its 881 domestic stores in January.
- Bon-Ton — Another Chapter 11 bankruptcy announcement in February 2018 was followed with plans to close 47 of its 260 stores.
- Top retailers that are closing stores in 2016, USA Today, August 11, 2016
- Wolverine Worldwide to Close About 140 Stores, The Wall Street Journal, July 15, 2014
- Chico’s to close 120 stores, eliminate 240 positions, News-Press, February 25, 2015
- Children’s Place to close more stores, MarketWatch, March 12, 2015
- Why Finish Line is closing 150 stores even though ‘athleisure’ is booming, The Washington Post, January 8, 2016
- Men’s Wearhouse parent closing 250 stores, CNBC, March 10, 2016
- Hancock Fabrics to close remaining stores, The Leaf-Chronicle, April 2, 2016
- Ralph Lauren to close 50 stores, cut jobs in bid for profitability, USA Today, June 7, 2016
- Macy’s closing 100 stores, Al.com, August 11, 2016
- So Much for Abercrombie & Fitch’s Comeback, Fortune, August 30, 2016
- Office Depot is Closing 300 More Stores, Fortune, August 3, 2016
- CVS to save $3B over five-year period with streamlining initiative, Drugstore News, December 15, 2016
- Is your local Sears or Kmart closing in 2017?, CBS News, December 30, 2016
- HHGregg to close all stores after failing to find a buyer IndyStar.com, April 7, 2017
- J. Crew more than doubles its planned store closings USA Today, November 22, 2017
- The Limited is Closing All 250 of its Stores, Fortune, January 8, 2017
- Payless Shoes wants to close 800 stores this year, Time Money, June 1, 2017
- Vitamin World starts store closing sales, NewsTimes, November 28, 2017
- Is Sears circling the drain? Not yet, Wall Street says, USA Today, August 24, 2017
- 200 Gap and Banana Republic stores closing, CNN Money, September 6, 2017
- American shopping mall mainstay Perfumania is closing stores and filing for bankruptcy, CNN Money, August 28, 2017
- Starbucks Is Closing All 379 of Its Teavana Stores, Fortune, July 27, 2017
- Simon Malls Forcing Starbucks to Keep 77 Failing Teavana Stores Open, December 4, 2017
- The list: Gymboree names 350 closing stores, USA Today, July 12, 2017
- Update: Gymboree exits bankruptcy, RetailDIVE, October 2, 2017
- True Religion to close 27 stores after bankruptcy filing: see the list, USA Today, July 5, 2017
- Ann Taylor and Lane Bryant’s Parent Will Close Up to 667 Stores, LA Times, June 12, 2017
- Michael Kors Closing Up to 125 Stores as Sales Plummet, Fortune, May 31, 2017
- Bebe Stays It Will Close All Its Stores by the End of May, Fortune, April 21, 2017
- Which stores is Rue21 closing? Here’s a list, USA Today, April 19, 2017
- RadioShack, closing 1,000 stores, leaves only these 70, USA Today, May 31, 2017
- Guess set to close 60 stores in 2017, Clark, March 17, 2017
- Here’s Why Crocs Is Closing 158 Stores, Footwear News, March 7, 2017
- Teen retailer Wet Seal is suddenly closing all of its stores, Business Insider, January 26, 2017
- BCBG is closing 120 stores, including at Mall of America, Star Tribune, February 7, 2017
- BCBG Is Back for Round Two, Racked, September 18, 2017
- Gander Mountain likely to close many more stores, USA Today, May 2, 2017
- GameStop to shutter 100+ stores, CNN Money, March 25, 2017
- Staples Closing Another 70 Stores as North American Sales Sink, Fortune, March 9, 2017
- Why are Family Christian stores closing? Christian retailer shutters citing falling sales., AOL, February 24, 2017
- MC Sports closing all 66 locations including stores in Kohler, West Bend, BizTimes, February 17, 2017
- Eastern Outfitters plans to shutter 48 Eastern Mountain Sports, Bob’s Stores locations, RetailDive, April 7, 2017
- Is Your Drugstore Closing? Pharmacy Giant to Shut 600 Walgreens, Rite Aid Stores, Time Money, October 26, 2017
- Vera Bradley Sharpens Focus on Licensing, Moves to Close Stores, Licensing.org
- Neiman Marcus to close 10 Last Call stores, USA Today, September 13, 2017
- American Apparel to close all of its stores, SFGATE, January 2017
- Gordmans files for bankruptcy, closing all stores including American Fork, Daily Herald, March 14, 2017
- As Alfred Angelo closes all stores, here’s what brides-to-be can do, Los Angeles Daily News, July 15, 2017
- Shoe chain Aerosoles hotfoots into bankruptcy, plans store closures, USA Today, September 15, 2017
- Shisheido revises 2017 forecast, closing some 100 BareMinerals stores, Fashion Network, November 2, 2017
- Lululemon closing Ivivva stores, St. Louis Business Journal, June 2, 2017
- After a Luxury Consignment Shop Goes Bust, Sellers Say They Lost Thousands of Dollars, Time Money, July 31, 2017
- Sam’s Club, Wikipedia
- Bon-Ton Stores files Chapter 11 bankruptcy as department stores reel, USA Today, February 5, 2018
- Toys ‘R’ Us announces store closures – here’s the list, Seeking Alpha, January 24, 2018
- Sears Holding Company Closes More than 100 Kmart and Sears Stores in Latest Cuts, LA Times, January 4, 2018Charming Charlie files for bankruptcy, closing 100 stores, RetailDIVE, December 12, 2017