Big box chains struggle to keep up
Although the flailing economy has forced big box and small retailers alike to shutter their doors, closings have been accelerated already this year by overgrowth of the industry began prior to the economic crash. According to the 2007 U.S. Economic Census, there was approximately 46.6 square feet of retail per capita, versus 23 square feet per capita in Great Britain, 13 in Canada, and 6.5 in Australia.
Throw in a dash of mobile and web shopping, and you’ve got a tough environment for brick and mortar stores which will lead to more downsizing this year.
JCPenney has already announced they will be closing 33 stores and inventory will be sold off, but spokespeople maintain that it is a move to help the company to refocus on their higher performing stores.
RadioShack to close 1,100 stores
Recently, RadioShack has confirmed they will be closing 1,100 stores, and according to a filing with the Securities and Exchange Commission, several executives will see golden parachutes worth millions of dollars, a move raising some eyebrows.
In a statement, RadioShack said they would be honoring the giant bonuses “after giving due consideration of the skills and talent deemed critical to the Company’s business turnaround efforts currently underway, the difficult business environment and the competition for skilled, talented employees.” The top brass must remain with the company through March 1, 2015 in order to receive the bonuses.
Staples to shut down 225 stores
Staples plans to shut down 225 stores before the end of 2015 to cut costs and address struggling sales, leaving 1,620 stores in North America
According to their most recent quarterly annual earnings report, the prognosis isn’t very sexy, as sales dropped $700 million in 2013 alone. Analysts point out that Staples already shut down stores in 2013, which contributed to some of the losses, but excluding online revenue, same-store sales were still down 4.0 percent in 2013.
The company had rapid expansion prior to the economic crash, and these closings undo some of that expansion, and the upside is that the retailer’s web business is actually improving, with sales up 10 percent for the year.
Other stores closing their doors
Staples, JCPenney, and RadioShack are not alone. Famous Footwear is closing 145 stores, Sbarro is shuttering 155 locations, Build-A-Bear is nixing 88 locations, Albertson’s is closing another 26 stores, and even big boys like Target is closing down 12 stores, and Macy’s is closing 5 stores.
But the reasons vary, depending on the chain, and shedding dead weight is par for the course, but the retail scene is changing before our eyes, and these are far from the only closings that will be announced this year.