U.S. Bricks and Mortar Stores Closing at Their Fastest Rate

[engine]

According to research by Credit Suisse, many years of overbuilding in the U.S. is taking its toll with bricks and mortar stores which are also feeling the effects of pressure from ecommerce. The research, published in The WSJ shows that stores are closing at their fastest rate.
[wsj.com...]


Ecommerce on its own is not solely to blame.

I can only speak from my own region, and it's clear that rising rents for bricks and mortar don't help, either.
It's difficult to beat the convenience of ecommerce, but it's not the same shopping experience.

Can bricks and mortar stores survive?

[keyplyr]

Seems the only scenario of a company doing well in both the physical world & ecomerce are those larger companies with multiple locations that sell the type of products or services that can transition well to online shopping.

The smaller brick & mortar is such a local dependent enterprise. There are of course apps and review sites that help, but otherwise the physical stores are subject to regional trends & economic fluxation.

The 2008/9 real estate debacle also upset many small stores across the US because of lease agreements and bank loan changes. I saw several local stores go out of business.

[NickMNS]

I think people may be reading too much into this. At least from the perspective of example sited. They fall into two groups. First the companies that have been in decline for years if not decades such as Sears Radioshack Kmart and JC Penny. Then, the pointless brands that were juice a short lived trend. Take Crocs as an example, the brand really only has one product a shoe that looks like a clog. Great, shoe practical my kids have some , they have 560 stores to sell mostly that one product, really? We bought my kids Crocs at a typical shoe store. So how was opening 560 stores to sell one product a good strategy to start? (Yes, I know they sell other types of crocs also but those products are filler to justify a flawed strategy).

So now I ask how is the failure of a flawed strategy the sign of anything or then confirmation of the flawedness of the strategy?

[piatkow]

My gut feel is that it is much the same on this side of the Pond. People used to go out to do their shopping then go home for a coffee, now they shop on the net and then go out for a coffee.

[engine]

NickMNS yes, and the problem lies in bad service, too. People visit stores to enjoy their shopping experience - well, that's what the wife tells me.

piatkow, that's so true. Savvy bricks and mortar stores already bring the "experience" together.

Some products I will not buy online: Mostly clothes, shoes, food (especially fresh), etc.
I don't like having to return clothes that don't fit, or it looked ok in the picture, but was poor when it arrived. I'd rather browse the store. Shoes - what is these days - I absolutely have to try them on.

[smilie]

There's 8000 stores that will close or go bankrupt in 2017.

That is an ASTOUNDING number.

The suburban shopping malls concept is dying, on top of the poor economy and inability of people to pay for basics, let alone go around to splurge in the malls.

I also somewhat agree with @NickMNS. There's lots of pointless stores that were open. And lots of fads - Lululemon pants , come on... I'll be politically incorrect, honey your fat arse look ridiculous in these. Same for pants that say Bebe or Juicy you know where, you are not 15 anymore. Lots of one-two product like Crocs. A lot of them made money on things that aren't selling anymore, like on old dirty jeans with holes - for years now I was unable to buy normal men's jeans , not dirty, not with holes, not with who-knows-how made stains in US, only in Europe or in outlets like Armani Exchange.

People are tired of fads and scams. I won't go near a mall that blasts music , every sales knew that used to bring sales numbers up, not anymore as it actually makes a large group of your audience (with money) to not want to go to your store.

Now also if you start selling the same old chinese crap that everyone else is selling (KMart, JC Penney) that I can buy used or on ebay or directly from China cheaper, if I really wanted chinese merchandise of low quality? Why would I go to your store?

And Sears... used to be american made quality. Now everything's either too old fashioned that even oldies don't buy, or chinese made that pretends to be american (Craftsman). No reason to go there.

[edited by: engine at 3:38 pm (utc) on Apr 25, 2017]
[edit reason] Please, NO politics [/edit]

[smilie]

@engine on shoes, it is different in Europe and US. Generally shoes quality in Europe is MUCH better. AND you are also in the proximity of a good shoe store or several. So.. while I lived in Europe I used to be that way. But now that I'm in US..and know the ones I want and brands, why would I go to the store that doesn't carry my product or my brand?

For example. I buy men's Ecco shoes for 2 decades now, thanks god for online stores that I won't mention and their free return policy, I can get the models I wear (in stock, typically, mostly online) shipped directly to my door. I'd have to spend half a day looking around for stores that might carry some, why?

[NickMNS]

I think Sears stands out from the bunch. Not because they do anything any better than any of the others but because they have been using failure as a strategy for decades. Since probably about 1994 when Sears sold the tower they realized that selling real estate assets would provide more share holder value than selling retail goods. So essentially the company continued to sell retail stuff so that they could gradually sell off the real estate assets while maximizing the value of the sale.

To list Sears in this context is really misplaced in my view and not comparable to the "misfortune" of a brand like American Apparel that was trendy for while but not sustainable as the brand was based largely on the objectification of young women.

[smilie]

I agree. Sears is an all different story. It is a what, 3rd generation removed from owners who actually wanted to run it? That makes them NOT want to run it, which means it's hired management and bankers - who all have short term personal profits in their mind over the long term. Which spells outsourcing and asset pillaging. So it is going down, won't be surprised if it'll wind up being bankrupt.

American Apparel , from Canada owner of non-american background :) yeah right. This is, basically , fads. They made quick millions via advertising to kids. Then as fad faded they found out that it is really hard to keep the fad going (according to wiki they had not made profit since 2009, sounds like a lot of unicorns). And as they made their name attached to propaganda of same sex marriages, who in the REAL USA (who buys American apparel) wants that? That's very arrogant and clueless, Target will find out the hard way as well.

[EditorialGuy]

My son (who specializes in transit-oriented development) was speculating that, in not too many years, most local business districts may consist of supermarkets (and maybe drugstores), restaurants, UPS or Fed Ex stores, and not too much else.

He also told me about something I hadn't been aware of: In some places, such as his neighborhood in Seattle, you can have your online purchases shipped to local receiving points (housed within supermarkets, minimalls, etc.) where they're stored in lockers with electronic locks. When a package arrives, you get a notification with a locker number and security code. You go to your assigned package locker, enter the code, and retrieve your package. It seems to me that, as such services become more popular, they'll create new local job opportunities, rental potential for building owners, etc. in local business districts, in the same way that UPS and Fed Ex stores have done.

[tangor]

A combination of factors has brought this about.

1 Construction of malls, strip centers, standalone .... chasing the at one time lack of retail space .... and the builders making mint.

2. Hedge funds running amok creating quick wealth which increased demand for retail locations.

3. increasing rise of suburban areas (and home building, etc) creating artificial need for "close in" retail locations.

4. Rise of on-line sales which prompted some to open retail space.

5. Retail giants eager for all the above willy nilly creating store fronts.

6. Every idiot thinking all above was forever continuing to do the same thing over and over and....

7. Reality bites, the housing goes boom, banking tanks, bottom lines shrink and all of a sudden that "retail space" is not being filled with new and holders of those properties jack up the rental rates.

8. Today.

More space than needed, not enough customers (no money disposable at the moment), uncertainty in markets, customer reluctance and changes in shopping.

There are five LARGE shopping centers near me. 4 of them are less than half occupied and the 5th (39 fronts) has only one tenet. Makes you wonder.

[smilie]

@tangor, yep, reality of the today. Add to this Baby Boomers retiring and not needing as much stuff, and generations behind them not having disposable income as boomers.

Have any of you guys been to furniture stores? What's up with $5000 for an ugly sofa? These are also dropping like flies all over the place. I can buy a chinese made sectional (not just sofa) for less and shipped to me, and REPLACED FREE if any damage. Or I can buy Italian designer furniture for that price. People are insane in thinking that BB disposable income , made while economy is good, transferred to the next generation.

>>@EG: In some places, such as his neighborhood in Seattle, you can have your online purchases shipped to local receiving points (housed within supermarkets, minimalls, etc.) here they're stored in lockers with electronic locks.

Yep, Amazon is testing this everywhere. Same in our area, location with lockers.

[LifeinAsia]

I think it goes beyond e-commerce (or maybe it's an extension of e-commerce?). More people seem more interested in/comfortable with ordering from a screen than dealing with real people. Which could also be related to the shopping "experience" of fighting traffic, trying to find parking, going to a store that has less inventory available than on their site, then (assuming you actually found something) standing in the checkout line to pay a higher price than you could have bought it for online.

Look at the stores listed- most of them sell clothes/shoes (or rely on clothing for a major portion of their sales). These days, people (at least among most people I know) buy clothes/shoes online- they buy several sizes/colors of the same thing, try them all on in the privacy of their own home, then return the rest.

I'm having a hard time trying to remember the last time I actually went into a B&M location (other than picking up something I ordered online or returning something, which I also bought online). Other than a supermarket or restaurant. Ah yes, earlier this year I actually went to an REI during a trip to Portland. That was to take advantage of a sale (and lack of sales tax) and pickup some cold weather items I needed for the rest of the trip. Beyond that, probably the last time was several years ago when I went to an electronics chain to check out phones in person before buying from Amazon.

[smilie]

@LifeInAsia, so true! Same here , I was in KMart last week because it is closing to buy something kids-related, but other than that.... occasionally in Norstrom Rack.

I actually buy from all over the world as good quality is often unavailable from US retailers, or at a very steep price. I buy clothes from italian-based online store. I bought custom-made furniture to our specs directly from China. LED light bulbs from China. Speaking of winter, recently I bought two camel wool blankets from factory in Russia , probably 1/4 of the price of comparable US product.

Why would I waste my time in a local big box B&M who seem to target in their merchandising middle-of-nowhere, Ohio? And and a metrosexual one pattern-fit-all? And 100 lbs over the normal weights? (my apologies if someone has weight issue here).

[farmboy]

Another factor I don't think I've read here yet, and something I have really noticed, is my own displeasure at the brick and mortar shopping experience.

The employees seem to be a lot more concerned about talking (gabbing is a better term), looking at their mobile device, etc. rather than taking care of the customer at hand or using a bit of down time to get prepared for the next customer.

FarmBoy

[Marshall]

I want to open a Pet Rock store. Who's in? :)

[keyplyr]

I want to open a Pet Rock store

You're about 40 years too late :)

[farmboy]

I want to open a Pet Rock store.

You need a marketing plan for today.

Like: "Having your own pet rock will provide protection from asteriods."


FarmBoy

[tangor]

Or open an Identity Crisis Pet Rock Center for those pet rocks that think they are air or water....

Brick and Mortar is going through a steep shakeout. The easy money loans of 5-10 years back evaporated 5 years ago. Online is taking a significant chunk. Shoppers are easily distracted OR they are living hand to mouth month on month. Kids in their 30s still live with their parents. Regulations and taxes have killed a few. The rage for higher minimum wage has taken its toll.

Most of the above don't apply to on line, but on line has its own set of problems. Just check the g threads here at ww!

Will B&M disappear? Probably not. But the scope and landscape of what will be there is likely to be quite different from what we grew up with. I was a pre-teen when the first MALLS began to appear.... and as a grumpy old Phart I have seen that paradigm of shopping crater and fall. Who knows what is next, as even the big box stores are showing fuzzy edges these days.

[farmboy]

FWIW, not far from where I live was a former boat manufacturing plant that was hugely enlarged and is now a F**ebook facility.

Right here in my town is a former industrial supply distributing company and a hospital/medical group now uses it for document storage.

A former mower distibuting company has been torn down and a new grocery is almost finished building. Amazing thing is, U.S. grocery stores have been leaving and a European company is the new grocer. (and they are building a number of stores in the U.S.

Don't take a nap or things will have changed when you wake up.

FarmBoy

[smilie]

>> @farmboy: Amazing thing is, U.S. grocery stores have been leaving and a European company is the new grocer.

That's easy. Because you can't eat US food, as a lot of mass produced stuff is not food.
In USA you have to go fancy upscale grocery to get to eat normal food europeans enjoy daily, or go to local farmers.

Because we have "free" "market", i.e. big agri companies are free to put anything they feel like as ingredients and call it anything they like , including "food". Big Agra gets to stuff as many pesticides and nitrates into "food" as they want. Whatever's in the middle of a typical big grocery store in shiny boxes and bags - all of it is typically full of sugar and salts and devoid of nutrients. Processed white flour "bread" in USA is poison. Even milk is destroyed, homogenized, pasteurized, 0 fat because they use fat in other products and they should discard the rest but they sell it and claim "healthy" - USA has the fattest population yet only in USA there's "fat free milk" and yogurts , obviously it doesn't help.

There's still some laws and traditions left in Europe and some countries have pretty high quality standards.

They even wanted to block Hershey from putting "chocolate" on their brown candy. Because if your first or 2nd ingredient is sugar or corn syrup that's not chocolate, that's brown candy, sorry buddy.

Even fruits , right now if I compare California berries to Mexican or Latin American (Chile for example) in store right now, I go for non-US any day because of better quality. Maybe except when it's a season for local produce.

I can go on forever because I traveled to over 30 countries and lived in several. US, by far, as food for average folks, has THE WORST quality - I am referring to fast food and cheap big box grocery stuff. No wonder europeans, like german Aldi, are killing it here.

[LifeinAsia]

Amazing thing is, U.S. grocery stores have been leaving and a European company is the new grocer.

That's easy. Because you can't eat US food, as a lot of mass produced stuff is not food.

I'll second that. The produce at a lot of chains is so full of preservatives and have had the taste genetically modified out of them. A few years ago when I grew my own tomatoes (although gave up because the local critters got to them before I could most of the time), it made me remember that tomatoes are actually supposed to have flavor! Luckily, the local area has several different farmer's markets.

Besides the quality issue, there's also the employment issue. Most of the big U.S. chains have been unionized. My understanding is that Aldi isn't (at least not in the U.S.), and I don't know enough about other players. After the union-led 2003-2004 supermarket strike in SoCal, the big chains lost (and never recovered) a major chunk of market share. Their prices (and quality) are still far worse than the non-chains (most of which are non-union) a block or two away.

[smilie]

@LifeinAsia, +1. I also grow my own tomatoes, cucumbers and some berries!

I want my daughter to know how the real , non-gmo, non-cardboard stuff tastes like.

While her correctly reacting taste buds have not been destroyed by the wicked profiteers (until she was 4 she wouldn't even eat chicken from a grocery store, only farm raised, and I am keeping it this way).

By the way, if anyone is in mobile applications, I have a very good idea in this niche. But because I don't want to risk too much of my own money and I don't program mobile myself, I am looking for either a development partner or someone who wants to share the expenses. I think this niche, properly positioned, can be taken head on, because people have no clue what products to actually buy. You know, we keep hearing this stuff , "lactose intolerant" and "allergies to peanuts" and it's all INCORRECT. All of it. Humans for instance can't be lactose intolerant as we are breast fed and would be gone as species a long time ago, in USA we develop it due to incorrect gut flora because of bad foods. This can help millions. PM me.

[farmboy]

No wonder europeans, like german Aldi, are killing it here.

Aldi is already here, the new grocer is Lidl.

FarmBoy

[EditorialGuy]

Will B&M disappear? Probably not. But the scope and landscape of what will be there is likely to be quite different from what we grew up with.

Just don't blink, or you might miss a fleeting trend. (Remember Internet cafes? They had an even shorter lifespan than video stores.)

[tangor]

I know I will date myself, but I miss old time news stands with a shoe shine stand next to it. These days you can get all the news you want on line, but I still haven't seen a computer (or smart phone) capable of shining my shoes.

[EditorialGuy]

Hair salons (what we used to call "barber shops" and "beauty parlors") aren't going away, either. In my city neighborhood, it's easier to get an expensive haircut than a cheap hamburger unless you visit McDonald's (the only real fast-food joint).

[LifeinAsia]

I still haven't seen a computer (or smart phone) capable of shining my shoes.

No, but apparently there IS an app for finding the nearest shoe shiner.

[buckworks]

>> Remember Internet cafes

One of my fond travel memories was an internet cafe in Viet Nam back in 2008. I went there several times in a three-day period and every time I was the only woman, the only "old" person and the only westerner. Everyone else was a teenage boy playing games. By the third day they were greeting me cheerfully even though we had no words in common. It was fun!

[Essex_boy]

Until recently I was living in Norwich, 3 shopping mails on the high street - Ones closed (refurb) been like that for a year ! 2nd one on the top floor its nearly empty, 2nd floor has what I can only call as market quality goods at he back of the first floor has many. many closed shops.

Finally the biggest one, yes it has shops it cant let out.

A lot of shops in the main shopping area of Norwich are closing/closed multiples and single operated stores are feeling the pinch.

Cambridge - Very hard to find shoe shops its mostly coffee shops catering for tourists.