In the last two months, several public announcements have been made on the imminent or recent closing of many large and small bricks and mortar retailers. Nationally, among the retailers closing stores are:
- JC Penney- 138
- Macy’s- 68
- Sears/K-Mart– 150
- HH Gregg- 60
- Abercrombie and Fitch- 60
- Guess- 60
- Crocs – 160
- The Limited- 250
- Wet Seal – 171
- American Apparel – 110
- BCBG- 120
- Payless- 400 (estimated)
- GameStop- 150
- Radio Shack- 70
- CVS- 70
- Family Christian Book Stores- 240
Many of these closures are in enclosed malls and power centers. Some have occurred in regional or community shopping centers but not to the degree of enclosed malls and power centers. And, unfortunately, there are more closings to come in 2017-2018.
In South Central Pennsylvania, specifically in the triangle nexus cities of Harrisburg, Lancaster and York, we have seen the closure of K-Marts, Staples, Office Depots, JC Penney, Sears and Sports Authority stores with more pending closures. Although the predictions of store closings have been around for years, the rash of these announcements and the depth of these closing lists have finally brought to the forefront of our minds the radical change in retailing in general. Why, as some would ask, and more importantly why now?
There are many reasons, but the biggest reason can be explained easily in one word – Internet. Amazon is a huge factor with their ease of online shopping and the almost innumerable selections. The pricing is aggressive, and every month, improvements in the ease of payments, and of faster delivery reduce the need, and desire of driving to “the mall”, when at the click of a button you can pay and expect delivery in a day, or three at most.
Another factor are the Millennials, a group who has been raised in the mobile phone culture. This culture is an almost complete new social environment, replacing or reducing the need to physically meet, shop, or otherwise interact with the world.
The era of the former retail shopping has not just altered, but radically changed, and the time of it is- NOW.
There will always be bricks and mortar retail shopping, but the placement of those physical shops is and will change at an increasingly faster pace. The design of shopping centers must change to the times – as must the owners of the centers and the retailers within. This will take courage to change, the money to revamp the shopping environment, a redesign of the physical spaces for the future, and a focus on tenant mix, with the latter to a much more in-depth and studied way.
The retailer must adjust, and the shopping center owners must assist in that adaptation. They are in the same boat, and both will sink or swim. There are ways to change, some expensive and some not, but adaptation is critical. Retailers and owners do not have next year or the year after, because by then, the funeral is over.
This new retail environment will breed new concepts and new mixed-use shopping centers, which are already underway, BUT, more change is on the way.
To some, this is doom and gloom, but in my view, it is exciting. The adjustment can cement the future of many retailers and shopping centers, with a re-emergence of traffic, a renewed experience of shopping, and simply the fun of doing it.
So, it is time to hold your nose and jump off the pier……not a lot of choice.