Stores closing at record pace

[imoldernu]

Another topic, actually what is happening to brick and mortar stores in larger cities happend to general stores 100 years ago in rural areas. Sears and Wards had big catalogs where you could order anything up to a pre-cut house. They used railway express for delivery, so you might have had to go to the local depot to pick up stuff. This left the local general store to deal with things Sears/Wards did not sell. Sears used to have a large mail order center in Chicago with multiple railroad sidings. Interestingly as Sears grew it decided it needed to take on the big cities and built stores, and the Catalog side faded away. (1993 for the big book). Then starting in the late 60s Sears began to fade away as it was a set of geographic feofdomes. I recall moving from Ca to Tx in 1976 and having to get a new sears card because the two divisions did not like one another.
Of course delivery today is better than 100 years ago when west of the mississippi meant an extra week of shipping time.

Good summation...
After a full career in retailing with Sears and Montgomery Ward, beginning in 1958, I watched the change from free standing stores, to malls, and then the movement into smaller communities with catalog stores, (between the two retail giants, some 4,500 units) to service the non-urban market.

So, the rise and fall of giants mirrors what has and is happening in the retail trade. In our 50,000 regiopolis, the single larger mall is anchored by
J C Penney and Sears, with Penneys' to close shortly, and Sears, to likely be close behind. Some 30+ stores have already closed, with the writing on the wall for more closures (2 in the past month).

With a strong effort by the mall owners, there have been many attempts to develop local entrepreneur based businesses... most of which haven't worked out. Traffic has dropped, so obviously sales have not been enough to support the basic costs of operation.

Based on some of the comments about lack of personal service being a cause of customer discontent, I'd point out that in order to stay in business retailers have very few ways of cutting costs except for payroll. A self defeating conundrum.

For the non-major metro malls, my guess is that the timeline for closing will be based on the expiration of longer term leases... a bet that the overhaul of Sears by Eddie Lampert lost, and a major cause of the KMart/Sears plan failure.

The hope for saving the malls seems to lie in trying to convert from retail only, to a combination of public oriented centers (health, entertainment, education etc.) and business offices of all types. IMHO, a gain of perhaps 10 years in operation.

For those who are interested in the retail industry in the US, I'd highly recommend this article. Some numbers that might surprise you.

https://www.thebalance.com/us-retail-industry-overview-2892699

 

[Midpack]

This is nothing new. Creative destruction in the retail sector has always been around, and I think the real culprit is as much Walmart as it is Amazon. Thousands of stores have been closed over the past couple of decades. The real story is why it has taken so long. Sears and Kmart have been on life support for years, dragging out their inevitable outcome and losing even more money in the process. Too much easy money for business.

It's not new, but it seems to be accelerating. And you know why. Our generation and older will be the last to stop supporting brick-n-mortar. When we start to go poof, the transition will accelerate, with brick-n-mortar retail along with many other conventions (non-autonomous cars, hard copy books, libraries, "exclusive" clubs, landlines, daily snail mail, keys, incandescent bulbs, paper checks, etc.).

 

[Amethyst]

Of all these things, few of which I will miss (never belonged to any exclusive club), I predict stores will come back in some form. People will always enjoy wandering around, admiring things to buy. Maybe it will be virtual reality shopping, though.

It's not new, but it seems to be accelerating. And you know why. Our generation and older will be the last to stop supporting brick-n-mortar. When we start to go poof, the transition will accelerate, with brick-n-mortar retail along with many other conventions (non-autonomous cars, hard copy books, libraries, "exclusive" clubs, landlines, daily snail mail, keys, incandescent bulbs, paper checks, etc.).

 

[jazz4cash]

I'm optimistic about the future.

Yeah, you are! We have lots of dying malls around here and other tired commercial districts that need refurbishing even with a good local economy. Usually they cut down more trees and build something brand new on the other side of the road which is a nail in the coffin of the struggling businesses.

 

[Walt34]

The first things I bought online was radio control model airplane stuff, and that from a mail-order place that I'd been dealing with since 1983. There were hobby shops locally but they were somewhat of a pain to get to and rarely had everything I needed/wanted. The best stocked one was a bit over an hour away so I had to wait until I had a day off work to make the trip.

That started me on buying my stuff mail-order and later on with the same companies as they went online. Product selection was of course much greater than any brick store could be. And the shipping was usually four or five days so unless something was time critical I'd just order and wait for it. Normally a bit cheaper too.

When Amazon went online DW and I were both in school and we quickly found that textbooks from Amazon were often more than half off the bookstore prices so that was a no-brainer choice.

Most of what we buy now is replacements for something that broke/wore out so we just don't spend that much on "stuff". The exception being for DW buying gifts for grandnieces and grandnephews. And for that she mostly goes to B&M stores but I rarely do that.

 

[harley]

I don't think Amazon (or any other online source) will replace Lowes/HD/other hardware stores. Sometimes you need to twist a nut onto a bolt to figure out the size, and when working on a project I sometimes make 4 or 5 trips to the store over a couple of days. Some things are just too hands on for online.

I read somewhere that one of the clothing chains was considering changing their B&M stores to be "try on" centers, where you go in and try the clothes on, but do the ordering online (either in the store or at home). The stores wouldn't need to maintain an inventory other than one (or more) of everything in each size. I'm not sure if that would work, but it shows that there's a lot of creative thought going on in trying to deal with the conversion to online shopping.

 

[mountainsoft]

The hope for saving the malls seems to lie in trying to convert from retail only

25 years ago it was fun to go to the mall. There were bookstores, music stores, video stores, arcades, kitchen supplies, household items, electronics stores, restaurants, and more. Those are all gone.

When I go to the mall now it is overrun with teenagers, and there's basically nothing left except teeny-bopper clothing stores, and the nice restaurants have been replaced with noisy fast-food "food courts". The only reason I go to the mall anymore is to have tires put on, or buy hand tools at Sears.

Our mall has tried to diversify a little with a fancy theater, a gym, and even a church. But it's a different atmosphere and clientele. I always laugh when I walk by the lounge areas where everyone has their nose buried in their smart phones and no one is talking to anyone else. I just feel old when I'm there.

 

[samclem]

I hope they convert at least some of these stores to "maker spaces." That would bring me back to the mall. Big 3D printers, CNC flatbed precision cutting of metals and other materials, access to folks who know how to make ideas come to life using newly available and affordable technology, etc. This is one place where the virtual world (large communities of hobbyists interested in microprocessors and in modern fabrication techniques) can support a B&M presence as people turn ideas into real things.

Nope, they won't earn as much as an old Sears store. But they'll earn more than a present Sears store.

 

[CaliforniaMan]

I am old enough to remember when the first malls appeared here in coastal North San Diego County, and completely destroyed and gutted the coastal city downtown areas. Now the malls are dying, and the downtowns are enjoying a resurgence. The downtown areas were always much more colorful and interesting than those boring self similar mall stores. Hurray, I think it is a great change, bulldoze all those old malls to the ground and plant some trees, I will shed no tears.

 

[Amethyst]

I feel young at the mall, what with all the turtle-headed mall-walkers. What will old people do for free exercise, once the malls are gone?

Then again, we hardly ever go there any more. We used to enjoy the mall too, 30 years ago. Then all the specialty stores closed, the good clothing stores went out of business, and the mall was taken over by athletic shoe stores, jewelry stores, and an immense Victoria's Secret. Such an odd mix.

Oh, and those mid-corridor kiosks with the aggressive salespeople calling you over...that really spoiled mall-strolling, for me.

25 years ago it was fun to go to the mall. There were bookstores, music stores, video stores, arcades, kitchen supplies, household items, electronics stores, restaurants, and more. Those are all gone.

When I go to the mall now it is overrun with teenagers, and there's basically nothing left except teeny-bopper clothing stores, and the nice restaurants have been replaced with noisy fast-food "food courts". The only reason I go to the mall anymore is to have tires put on, or buy hand tools at Sears.

Our mall has tried to diversify a little with a fancy theater, a gym, and even a church. But it's a different atmosphere and clientele. I always laugh when I walk by the lounge areas where everyone has their nose buried in their smart phones and no one is talking to anyone else. I just feel old when I'm there.

 

[garyt]

To take the point a bit further when I was a kid growing up in the Detroit area the day after Thanksgiving was the day to go to Hudson's big store in Downtown Detroit (at least 16 floors of merchandise). That was an all day trip. Of course Hudson's is no more and the building did get blown up eventually.

Some of the old Hudson's building is now Ford Field

 

[bUU]

i sent an email to macy corporate telling them this is why you are closing stores.

It could be that things like that are the only things that are keeping these doors open as long as they are. The target demographic wants​ stores to be an experience, an event. If all you're going to do is go to a store, pick something off the shelf, and bring it to a cashier, it makes absolutely no sense to many folks now to go to the store for something as trivial as that. If you want to feel and touch things and try them on why not do that in the privacy of your own home? Returns are "free". Brick-and-mortar stores are declining because so many people are adopting online shopping as their primary mode of shopping, because they find it to be overall a more convenient and therefore Superior approach.

There are evils of online shopping most notably the way online shopping retailers treat their warehouse employees. But in terms of comparison of service, that's of course subjective and the overwhelming trend is toward people preferring the online experience over the brick-and-mortar experience.

 

[JoeWras]

Computer parts? Forget about it. There's only one store about an hour drive from my house in the big city. Even then they only carry selected items so I don't make the trip unless I need something immediately (i.e. my hard drive fails unexpectedly)..

I don't think Amazon (or any other online source) will replace Lowes/HD/other hardware stores. Sometimes you need to twist a nut onto a bolt to figure out the size, and when working on a project I sometimes make 4 or 5 trips to the store over a couple of days. Some things are just too hands on for online.

I agree with you for the short term (maybe 5 years), but don't be so sure.

I quoted mountainsoft's discourse on computer parts. Last year I had a power supply fail on my homebuilt, on a Sunday. I figured I'd just got to our local store I've been going to forever. Pulled up the website to get hours, and discovered they were closed forever. Hmmm. Went to Amazon figuring I'd have to wait a few days. Nope. They had the PS and could deliver it in a few hours for a few bucks, or that evening for free. Opted for the evening delivery and I was up and running that Sunday night. The web site had all the specs and pictures to assure I got the correct connectors and PS type.

Enter your bolts. Imagine as part of the buying experience you shoot a picture of your bolt. It somehow figures out exactly what type of bolt it is (metric, thread count, etc.). Your bolt arrives later that day.

I know, I know, I still LOVE to go to the hardware store. But be aware, HD and Lowes have reduced their inventory and are pushing a lot of things online. I'm also finding their hardware isle has shrunk. Also finding it with my local hardware store.

Do you know those little rubber bumpers on the end of your doorstop? Went to HD and Lowes. Both didn't have them. Both said I had to buy the whole unit. Went to my local hardware. SAME STORY! I was irked. Went to Amazon and got a bag of 20 of them for 3 bucks, with free delivery.

The world is turning upside down.

 

[CaptTom]

...But be aware, HD and Lowes have reduced their inventory and are pushing a lot of things online. I'm also finding their hardware isle has shrunk. Also finding it with my local hardware store

This is actually part of a long-standing pattern with home supply/hardware stores.

They start out being successful because they have the materials and parts customers need. They grow, expand, go public and hire MBA's. Some genius figures out that if they get rid of the low-profit items, and restock with shiny, top-end fashion products, they make a higher profit.

They also jump on the "reduce inventory" bandwagon with other retailers. No need to keep two of those in stock... even if they're used in pairs!

Pretty soon they wonder why they're losing customers.

Historically, some other retailer comes along who stocks the stuff customers actually need, the old chain goes out of business, and the cycle starts over.

The only difference now is that new kid may be on line.

 

[athena53]

I read somewhere that one of the clothing chains was considering changing their B&M stores to be "try on" centers, where you go in and try the clothes on, but do the ordering online (either in the store or at home). The stores wouldn't need to maintain an inventory other than one (or more) of everything in each size. I'm not sure if that would work, but it shows that there's a lot of creative thought going on in trying to deal with the conversion to online shopping.

Thing is, once a store becomes solely a place to take orders, what's to keep you from entering the info on the tag into a search engine (or using an app to scan it) and finding it elsewhere, cheaper or faster? That's already happened with the appliance-buying process. You go into Lowe's or HD to look at dishwashers but if you actually want to buy one they'll take your money and you might get it next week if you're lucky. I think they lose a lot of advantage over on-line if you can't take the merchandise home with you or have it delivered the next day.

 

[MichaelB]

The real culprit is you, me and everyone else who decided to purchase goods and services from sources other than the old brick and mortar retailers. Pogo had it right...

True.

It's not new, but it seems to be accelerating. And you know why. Our generation and older will be the last to stop supporting brick-n-mortar. When we start to go poof, the transition will accelerate, with brick-n-mortar retail along with many other conventions (non-autonomous cars, hard copy books, libraries, "exclusive" clubs, landlines, daily snail mail, keys, incandescent bulbs, paper checks, etc.).

I don't agree with the thread consensus, that Amazon and online buying is driving this. I also don't see any evidence that this is an increasing trend. In fact, new retail construction is still growing in the US. Tenant demand will outpace retail construction in 2016: Report | ICSC SCT

In another sign that physical retail is in robust health, demand for U.S. retail space is high and will remain high even as more space comes online in the coming year, according to JLL’s Development Outlook for the coming year. “Demand for quality retail space continues to outpace new construction, resulting in consistent vacancy compression and rising rents across most major markets,” wrote James Cook, director of retail research for JLL, in the report. “In the last two years vacancy rates have fallen 120 basis points, and even with new supply we anticipate that vacancies should remain low through 2016.”

I think large store closings, like HHGregg, Office Depot & Office Max, Circuit City, Sports Authority, are due to massive unconstrained overbuilding. Putting up new stores everywhere has been a cheap sales growth strategy for CEOs unconcerned with long term effects and impact, unable to grow same store sales but reaping a bonanza in compensation and bonuses due to the impact of more stores on short term sales.

The US still has so much undeveloped land, and REITS have substantially lowered the cost of financing of retail and office space. So, store closings that are household names make the news, but the building goes on.

 

[Steve40th]

I guess the big boxes will eventually fee it, as they did to little business years ago when they opened up and undercut everyone.. Sears used to sell planes, they have been around a long long time.

 

[dixonge]

I bought my Samsung TV from Amazon. Honestly I could have purchased it from Costco, but physically my husband and I would have to deal with transporting it home. So Amazon delivered and installed for us otherwise we couldn't. It's too big and too heavy.

The price included *installation* Wow. Didn't know that was even an option!

 

[dixonge]

If you think Amazon is killing B&M now, wait until Amazon rolls out their own B&M stores...

"I can’t help but feel that, in Bezos’s mind, he wants to be the first trillion-dollar valuation company"

https://www.nytimes.com/2017/03/25/technology/amazon-wants-to-crush-your-store-with-its-technology-might.html

 

[Beldar]

Radio Shack has just completed another round of closings. 2 more closed in our area in the last month. Naturally, I visited them to see what type of bargains they were offering (none really). But seeing the original sticker prices for many items sure gave me an idea why their business model has failed (twice or more the online price).

The Apple store here puzzles me as well. It's almost impossible to buy anything there (there's no checkout counter). Instead, you have to corral one of the sales kids and nearly demand to buy an item. They go out of their way to help you with any of the products, but seem to be hands-off when it comes to sales pressure.

Strategery.


_B

 

[ponyboy]

Funny how everyone seems to love bezos (amazon) who did more for killing brick and mortar stores than any other company...yet everyone universally hates the waltons (walmart owners.) Double standard much?

 

[athena53]

Funny how everyone seems to love bezos (amazon) who did more for killing brick and mortar stores than any other company...yet everyone universally hates the waltons (walmart owners.) Double standard much?

My biggest complaint against Wal-Mart: they led the race to the bottom in selling the cheapest, flimsiest goods made in the countries with the poorest working conditions. I try to avoid buying merchandise made in China so I'm rarely in Wal-Mart unless I'm on the road and it's the closest grocery store.

I don't use Amazon.com that much either and have resisted getting Amazon Prime for that reason. It's a hook to make you shop there first. I prefer to do a search on what I want and order directly from the store. It's been one of my most successful ways to find things made in the USA, such as the backpack I bought a week ago.

 

[bUU]

Pretty soon they wonder why they're losing customers.

To whom? The local hardware store that charges four times as much for things? or to their own online presence?

Historically, some other retailer comes along who stocks the stuff customers actually need, the old chain goes out of business, and the cycle starts over. The only difference now is that new kid may be on line.

Actually, to some extent we've come full-circle. Go back over a hundred years, and you could find yourself having to make periodic day trips to the local town, a hundred miles away, to load up on stores that the local general store simply doesn't stock, because they can't stock everything. Now, we're going back to that more efficient (for the seller) model, with big warehouses, one for each city, have "everything", because it is too expensive for every local store to carry that much inventory, so you just order it from the city warehouse and a day later it is delivered.

Thing is, once a store becomes solely a place to take orders, what's to keep you from entering the info on the tag into a search engine (or using an app to scan it) and finding it elsewhere, cheaper or faster? That's already happened with the appliance-buying process. You go into Lowe's or HD to look at dishwashers but if you actually want to buy one they'll take your money and you might get it next week if you're lucky. I think they lose a lot of advantage over on-line if you can't take the merchandise home with you or have it delivered the next day.

There is no solution to that quandary. The advent of online retail means, unequivocally, that those retailers you're talking about simply should not exist. The fact that they're still around is a reflection solely of the fact that enough people are willing to deal with the disadvantages, at least often enough, to cover the costs. However, as time goes on, we should expect that to simply no longer be the case. The answer isn't to try to compete. The answer is to realize that they cannot, and go out of business (i.e., switch to online only) before they start spending more to maintain B&M than it is worth.

 

[Steve40th]

Funny how everyone seems to love bezos (amazon) who did more for killing brick and mortar stores than any other company...yet everyone universally hates the waltons (walmart owners.) Double standard much?

Interesting,never thought of the hypocrisy in that way.

 

[W2R]

The price included *installation* Wow. Didn't know that was even an option!

I bought my Panasonic 55" plasma TV in 2013 from Amazon. They brought it to the door, and I opened it and asked them if they could please help me out by putting it inside on the TV stand that was right by the door. They did, and unpacked it to do that.

Maybe I played the "poor little old lady all alone" card a bit, being overly sweet. Or maybe they always do this. But for whatever reasons, they set it up, turned it on, and made sure it worked before they left. I didn't pay extra for any of that. I think that on Amazon it said nothing about doing all this.