Retail Store Closings for 2019: Apocalypse or Adjustment ?
Most retail companies have announced their major strategies and plans for 2019. Included in that are a number of store closings. And there are a lot, although not quite as many as in 2017 and 2018. What does it mean? Is it further evidence of a bricks-and-mortar retail model that is in decline? The “retail apocalypse” is nigh?
Actually not. The reality is not quite that simple. The truth is that each and every retail brand or store chain that is closing has different reasons for doing so, and each has a different strategy going forward. Here is a list of some of the major brands and the number of store closings that have been announced for 2019:
Payless ShoeSource 2500 stores
Gymboree 800 stores
Family Dollar Stores 390 stores
The Children’s Place 300 stores
The Gap 230 stores
LifeWay Christian Bookstores 170 stores
H&M 160 stores
Starbucks 150 stores
Performance Bicycle 104 stores
Sears 89 stores
While it appears to be an impressive list that portends ill for the industry, let’s look at a few individually.
Starbucks is not going out of the retail coffee business. With over 30,000 locations worldwide and about 30 percent of those in the US, closing 150 in the US is not a bad thing. Rather, it is a positive move to close nonproductive locations in order to develop an overall healthier portfolio of stores.
LifeWay Christian Bookstores
LifeWay Christian Bookstores is closing their entire fleet of physical stores while at the same time refocusing and strengthening their online presence. This is a big risk for them. Their stores are part of the communities where they are located and are a focus of community activities. So by eliminating the physical stores, they will have to try to digitally re-create part of the feeling of belonging to a community. It is likely that customers will be initially disappointed and have hurt feelings about the change.
Gymboree had stopped selling online all together while closing all stores. The brand is basically shutting down, for a variety of reasons. It’s not a strategy to refocus on digital verses physical retailing.
While H&M is closing 160 stores, they are at the same time opening 355 new stores, mostly outside of Europe and the US.
Family Dollar Stores
Family Dollar Stores, an iconic national retailer, will be keeping 200 stores open but doing business under a different name. Spoiler alert: everything won’t be retailed for $1.00.
Retailing, whether digital, physical, mobile, or by any other means, is constantly evolving. Store closings—even lots of store closings by multiple retailers at the same time—don’t necessarily indicate one industry-wide trend. Some companies close stores to strengthen their overall retail portfolio. Others are rebalancing their omni-channel mix from physical to digital.
And still others, sadly, are just failing for a variety of reasons. Those reasons are best explained by their disregard for one or more of The Five Laws of Retail. The product assortment may be wrong, the pricing may not be right, or the inventory turn may be going in the wrong direction. Or sadly, they have forgotten the First Law of Retail—People First—and the community employees of the company has gotten sour and disillusioned, and that gets communicated to the customers.