The past decade has been devastating for U.S. brick-and-mortar retailing. The “cold winter” has sent traditional shopping malls and shops across the United States to a record rate. The main reason behind this is simple: Americans are increasingly leaning toward shopping online. In 2019, a record number of U.S. store closures are set.
According to the latest figures from Business Insider, as many as 9,300 stores closed this year, breaking the record of about 8,000 stores closed in 2017, including the world’s leading chains such as Victoria’s Secret, GAP and Forever 21, and even Macy’s. Traditional department store giants such as Sears are also hard to escape.
The winter of retailing derived from the financial crisis
All this has to be done since the 2008 financial crisis, Business Insider reported. The financial crisis laid the foundation for the difficult years ahead for U.S. retailing.
After the housing bubble burst, the U.S. economy experienced its worst recession since the Great Depression. Thousands of people have lost their jobs as a result, and business systems, including large retailers, have been affected.
In the years that followed, unemployment slowly declined and consumer confidence improved over time. However, many retailers have been slow to recover. This led a group of private equity firms to start buying large companies and divesting them from publicly traded entities. The private equity firms control department stores including Belk and Neiman Marcus, as well as brands such as Hot Topic and PacSun Mall.
In some acquisitions, however, retailers have been saddled with huge debts that cannot be repaid. Over the past few years, billions of dollars in corporate debt have begun to mature, leading to a flood of bankruptcies and bankruptcies, a phenomenon that will continue for years to come.
The collapse of toy giant Toys R Us in June 2018 is typical of private equity problems.
While Toy City was once the largest toy seller in the United States, the surge in other smaller chains and increased competition from big retailers such as Wal-Mart are starting to hamper the brand’s growth.
Toys R Us, a former public company, bought and privatised private equity giants Bain Capital, KKR and Warner Real Estate Trust in 2005 for $6.6 billion. Toy City’s hopes of taking advantage of the takeover battle quickly dashed. Not only that, but the deal left Toy’s anti-Trump city with more than $5 billion in debt, which the company failed to pay off over a decade and eventually went bankrupt.
At the same time, during the decade, e-commerce began to spread rapidly. According to Business Insider, the average U.S. household spent $5,200 online in 2018, up nearly 50 percent from five years ago, as consumers moved from traditional stores to online shopping. In fact, according to CNN, U.S. consumer spending has remained strong this year, with unemployment below 4 percent, its lowest level in half a century.
A new report by INVESTMENT FIRM UBS also shows that with the rise of online shopping, more and more stores are likely to close in the coming years. By 2026, 75,000 stores selling clothing, electronics and furniture will close, and online shopping is expected to account for 25 percent of retail sales.
With the rapid rise of e-commerce, a new type of retail model has followed – facing the consumer model head-on. Online celebrity brands such as Casper and Glossier are focused on building legions of fans on social media, eliminating the need for traditional physical sales space. Traditional department stores and shopping centres, by contrast, have lost their appeal because it is hard to find unique “flash points” to attract customers.
“Real retailers are already in recession,” said Mark Zandi, chief economist at Moody’s Analytics. “They’ve been laying off workers in a row. According to statistics, 1.3 million retail workers have lost their jobs in the past decade, and another 728,000 have been indirectly unemployed as a result of layoffs.
John Morris, a senior analyst at D.A. Davidson, a financial services firm, said the “cold winter” was a useful reshuffle for the retail industry. “We’re doing a retail overhaul that’s been going on for years. Retailers find that in the case of physical stores, less is more. “
Who’s “frozen” in the winter of 2019?
Payless, the US shoe giant, filed for bankruptcy in February and said it planned to close all of its Stores in North America (2,500), possibly the largest retail reckoning in US retail history.
The impact on brick-and-mortar retailing from online retailing is believed to be the main reason for Payless closing its stores. It is the second time the company has filed for bankruptcy since April 2017.
Founded in 1956, Payless is the largest discount footwear chain in the United States.
Gap said in February it would close 230 stores of the same name over the next two years. The company reported a 7 percent drop in same-store sales for the brand during the holiday season.
Forever 21, a well-known international chain, filed for bankruptcy protection and plans to close 350 stores worldwide during the restructuring process.
In September, Forever 21, a well-known international chain, filed for bankruptcy protection and plans to close 350 stores worldwide, including 178 in the U.S., as part of the restructuring.
However, the company said it was simply trying to use the bankruptcy filing to re-plan and shore up its future. Part of the restructuring is to narrow its global market footprint and pull out of 40 countries. In addition to its u.S. operations, Forever 21 is expected to continue to do business in Mexico and Latin America, while significantly reducing its operations in Asia and Europe.
Workers are removing the Sears logo from the facade. Picture, reuters. Jpg workers are removing the Sears logo from the facade. Picture disreuters
In October 2018, the world’s department store giant, once the “king of the world’s department stores”, filed for bankruptcy protection at the century-old Sears. After being released from bankruptcy protection in February, the company announced it would continue a new round of store closures in August, September and November.
Victoria’s Secret: 53
Victoria’s Secret, the once-popular lingerie brand, is also in the air. Photo Business Insider. jpg-Vimy cancels 2019 big show picture according to Business Insider
Victoria’s Secret, the world’s leading lingerie brand, said in March it would close 53 stores in North America this year due to a “declining performance”. In November, a 24-year-old Vermi show that began in 1995, came to an abrupt end.
Vimy reported an operating loss of $151.2 million and a net loss of $252 million in the third quarter of this year. At its peak in 2009, Vimee set a record of 600 underwear sold per minute.
A and F (Abercrombie and Fitch): 40
U.S. fashion brand Abercrombie and Fitch said in March it planned to close about 40 stores, most of them in the U.S. On November 26th the group reported third-quarter sales of $863m, below analysts’ expectations of $868m, while net profit fell 73 per cent to $6.5m.
Barneys New York: 15
Barneys New York, a prominent high-end department store chain, filed for bankruptcy protection in August and said it would close 15 of its 22 stores.
Macy’s, which has been closing stores since 2016, has closed stores in Wyoming, Washington, California, New York, Indiana, Massachusetts, Virginia and West Virginia this year.
Macy’s net sales fell 4.3 percent to $5.17 billion in the third quarter from a year earlier, while net profit fell 97 percent to $2 million in the quarter, and same-store sales fell for the first time in two years (3 percent).