10 Retail Sectors Where Stores Are Closing the Fastest
10 Retail Sectors Where Stores Are Closing the Fastest
Despite the recession, many retailers are still struggling. This has led to a number of sectors that are closing stores at an alarming rate. Let’s take a look at ten of the most notable retail sectors that are on the brink of collapse.
The retail industry is experiencing a wide range of changes. From an increase in e-commerce to a new wave of store closings, the retail sector is in flux.
A recent study by IHL examined the impact of store closures on the industry. It found that over the next decade, retail trade will lose 587,000 jobs. However, the non-store retail sector will see 233,500 job losses.
E-commerce has changed the way consumers shop. Online stores allow customers to order items and have them shipped to the store of their choice. In turn, retailers have been able to sell merchandise at higher prices.
Many companies have closed hundreds of stores. These include Gap, Joann, and Tuesday Morning. Although these chains had been financially sound in the past, their balance sheets have taken a hit.
Non-store retail sales have been growing in recent years. The industry’s revenue was $26 trillion in 2021. This is compared to $6.8 trillion in 2010.
Retailers can also benefit from online growth. The sector will be a driving force in the future. Some retailers are expected to take over e-commerce fulfillment roles.
While the industry has been relatively stable since the Great Recession, the e-commerce industry has shown enormous growth. The report projects online retail will outperform stores in terms of sales.
Overall, the report predicts that the retail sector will lose 600,000 jobs over the next 30 years. But while the report assumes 2% annual retail growth, it does not account for the effects of e-commerce on the retail industry.
For example, the report estimates that an e-commerce growth rate of about 50% would require stores to close. However, the report doesn’t allow pure-play online retailers to open new stores.
The retail industry has seen its share of bankruptcies, closings, and other changes over the past decade. Despite these hardships, the sector has recovered and is gaining strength. But today, the industry faces inefficient operations and huge debt. This could lead to a new wave of store closures.
In the United States, department stores are facing declines in same-store sales, while off-price retailers are recovering at a slower pace. While a handful of retailers closed hundreds of stores, others have filed for bankruptcy.
Sears is one company that has been struggling. The chain has been going through a series of leadership shake-ups. It has been losing market share and is monetizing real estate. It has also gotten hit by stay-at-home orders, which have caused sales to drop in the US.
Another struggling retailer, Target, has announced plans to close 150 stores. Meanwhile, Macy’s is looking for a miracle on 34th Street.
RTW Retailwinds has also announced plans to close nearly 400 stores. One of its subsidiaries, Carter’s Inc., said that it would hold some seasonal inventory through 2021. Other retailers, such as Joann and Tuesday Morning, have increased their risk of bankruptcy.
The Asia-Pacific region ranks third, with 61 of the top 250 retailers. However, the region accounted for just 1.4% of global retail sales.
More than a dozen retailers have closed more than a hundred stores in the last year. Some are liquidating their fleets. Others are retooling their stores.
Analysts expect declines in full-year dollar sales at both off-price chains and department stores. Off-price chains are projected to lose double digits, while department stores are expected to report losses in the single digits.
If you’ve ever wondered what’s the fastest-growing sector in the retail industry, you’ve come to the right place. In fact, according to research from Retail TouchPoints, this category is growing faster than the rest.
One industry to keep an eye on is the discount segment. This industry is expected to outstrip the others in the near future. Currently, discount stores provide value for money. During the recession, people flocked to them because of the thrill of finding a deal. They also helped to eat away at department stores.
Several retailers are at risk of filing for bankruptcy. A few examples include Tuesday Morning, Joann, Bed Bath & Beyond, and Rite Aid. But with the economy slowing, a new wave of store closings is likely.
Another sector to watch is the apparel industry. Apparel stores will be the fastest-growing in the next three years. And it’s not hard to see why. Consumers are shopping for more quality and value for their dollars.
Nonstore retailers, such as mail-order houses and home delivery services, are also gaining ground. This is particularly true in North America. The industry is expected to reach an all-time high of $31.3 trillion in revenue by 2025.
Some retailers are even closing their brick-and-mortar locations. Fossil Group, for example, closed 170 stores last year.
Despite these challenges, the retail industry remains resilient. However, it’s not out of the woods just yet. With a lot of debt and inefficient operations, it’s not a surprise that several retailers have filed for bankruptcy.
The good news is that the industry will eventually recover. It’s currently growing by 2.9%, and sales are up more than 12% in the first seven months of 2018. That means the retail industry is still well ahead of its pre-pandemic peak.
The number of stores that have closed in the past year has been staggering, and analysts have predicted that 75,000 stores will close in the next 5-6 years. This includes retail chains such as Nordstrom, JCPenney, Bath & Body Works, and Victoria’s Secret.
Traditional retailers have been struggling for years, as consumers move away from in-store shopping to online shopping. While many categories have been replaced by digital retail, clothing is still the hardest hit. With the rise of e-commerce, physical retail is expected to continue declining in the years to come.
Retailers need to rethink the customer experience. Traditional brick-and-mortar establishments will have to become experiential showrooms that bridge the gap between online and in-store shopping. For example, Amazon has raised the bar on the in-store experience, offering instant credit after returning an item. IKEA has taken the idea a step further with its experiential showrooms. These types of stores are being replicated by other retailers, and they can provide a curated shopping experience.
However, sales associates remain essential to the in-store experience, and they can play an important advocacy role for the customer. For example, retailers can create a more curated, store-first experience by reducing inventory complexity and providing an authentic, individualized shopping experience.
As the number of store closures continues to grow, traditional retailers will have to rethink the customer experience and connect the consumer with the products they want to buy. Creating a streamlined, omnichannel approach will help them to improve profitability and make their stores more effective. In the meantime, consumers will be able to take advantage of convenient store locations, such as fulfillment centers. And with the rise of mobile technology, shoppers will have the freedom to purchase from virtually anywhere.
A recent report titled “The Age of Focus” by consulting firm A.T. Kearney suggests that there are some retail sectors that are closing the most stores. It’s an interesting topic. Some retail sectors are more vulnerable than others to the changing world around them. The good news is that despite the bad news, many companies are in a better financial state than they were just a few years ago.
However, this isn’t to say that the entire economy is on a path to recovery. In fact, a recession isn’t out of the question. And with geopolitical tensions on the rise, the economy may be in for a bumpy ride. While the newest iteration of the recession isn’t expected to hit the United States anytime soon, it will affect other nations and could have an impact on global trade. With the economy in the doldrums, we may see a new wave of retail store site selection closures. Those with weak balance sheets are the most vulnerable.
There are many more interesting topics in the retail industry than these. From the refugee crisis to the rising threat of terrorist groups, the global community is undergoing a period of disruption. This has affected many different regions of the globe and is expected to continue for several more years.
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