According to commercial real estate experts Cushman & Wakefield, across all sectors, 9,000 to 10,000 shops are expected to close down in 2017 in the USA, with another 13,000 closures forecast for 2018. The hardest-hit segment is that of department stores. They are struggling to adapt to changing consumer habits, and many of them are forced to streamline their organisations to stay afloat, further compounding their woes.
Macy’s too has engaged in an aggressive store-closure policy, with a view to save up to $600 million in costs. The department store, weakened by declining sales, announced in January the closing down of 70 stores and the elimination of some 10,000 fixed-term jobs.
JC Penney has adopted a similar strategy: last February, it heralded the closing down of between 130 and 140 stores, and initiated a voluntary redundancy programme involving 6,000 employees. The group’s target is to save $200 million per year, and to carry on managing a total of 900 stores, a downsizing of approximately 15%.
As for Saks Fifth Avenue, owned by the Hudson’s Bay group, it plans to cut 2,000 jobs. The ensuing reorganisation is expected to generate cost savings to the tune of $170 million for the upmarket department store chain.
Bloomingdale’s installed tablets in-store some years ago, while others are concentrating on categories different from ready-to-wear apparel. For example, beauty: JC Penney has struck a deal with Sephora, while Macy’s has set up an exclusive partnership with BeGlammed. JC Penney has instead set its sights on home decoration, expanding its Home range, and Nordstrom has decided to launch a store dedicated exclusively to men, in New York, opening in 2019.
All of these department stores face competition on two fronts: mass-market distribution on the one hand, notably Walmart, and booming e-tail giants like Amazon on the other. The popularity surge enjoyed by e-tail is a factor in the consumers’ declining interest in shopping malls, they too penalised by disappearance of their main footfall drivers, department stores. At the same time, the huge number of shopping malls spawning across the country has generated fierce intra-sector competition. Several industry experts have predicted that one in four shopping malls will close down by 2022. This means about 300 of the 1,100 malls currently in business in the USA.
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