Nearly 10,000 retail stores announced closures in 20191. Payless ShoeSource alone accounted for 2,500 closures as part of the company’s complete liquidation. Other large retailers, like J. C. Penney, are attempting to downsize and restructure under Chapter 11 bankruptcy protection. Closures of large retail anchor stores can also have ripple effects throughout shopping malls leading to closures of smaller retailers. It is expected that up to 75,000 retail stores will close by 2026, resulting in the loss of hundreds of thousands of jobs in the retail sector (197,000 jobs were lost between January 2017 and December 2019)1.
While this dramatic reduction of the number of stores may appear to indicate a decline in the retail sector, retail sales have, in fact, risen steadily over the past several years, and are expected to continue to rise in the future. What these store closures largely indicate is a change in the way that consumers prefer to shop. That is, rather than go to brick-and-mortar stores, consumers are now doing a large share of their shopping online. While online giant Amazon (which began solely as an e-commerce site and has recently begun to open a handful of physical stores) dominates the online retail sector, other large retailers have shifted a significant share of their business to online sales. Traditional department store chains like Walmart, Target, Kohls, and J. C. Penney each earn billions of dollars in online revenues annually.
Big box merchandise retailers may be able to survive the change in consumer preferences of shopping online by offering their own delivery services. Others may not be so lucky. Blockbuster video, once a dominant force in video rental with 9,000 stores nationwide, now has only a single store left. Technological advances like smart TVs, and improvements in internet speeds and streaming services have all but eliminated the need for retailers of physical versions of these products. The same is true for products like books and music. Video game retailers may be the next specialty stores to disappear. E-commerce will likely affect other industries. In the coming years, we will learn how food delivery apps are going to impact the restaurant industry. Will drive-thru and sit-down restaurants be a thing of the past? We can only wait and see which new industries e-commerce will disrupt next. Source: 1Morris, Chris. “7 popular retail brands that may be on the brink of disappearing.” CNBC, 21 December 2019, https://www.cnbc.com/2019/12/21/victorias-secret-jc-penney-among-retailers-closing-stores-in-2020.html. Accessed 29 December 2019.