Major retailers closed 12,000 stores in 2020, after a pre-pandemic and devastating 2019, when more than 9,300 stores closed.
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We all know the impact that Covid-19 had on retailers – both large and small – and the struggle continues as higher wages, e-commerce and a bevy or workers just want to stay home or try new careers. In fact in Tuesday’s New Yorker, there is a must read column – Why are so many knowledge workers quitting. Cal Newport, the columnist, shares his first hand account of a friend of his who received a call from an executive client last spring who was looking for help to understand why he was losing so many of his employees. His friend, Brad Stulberg and executive coach had already started writing a book, pre-pandemic, called “The Practice of Groundedness” which Newport writes, argues for a values based approach for defining and pursuing success. Topline is that he says the pandemic didn’t create obstacles to their work, but nudged them to rethink the role of work in their lives altogether. Many he says are embracing career downsizing and voluntarily reducing their work areas to focus and emphasize other aspects of their lives.
What does this have to do with retail? Everything. A decade or so ago, we consumers turned to Amazon and other e-commerce retailers. Major retailers closed 12,000 stores in 2020, after a pre-pandemic and devastating 2019, when more than 9,300 stores closed. UBS, the financial services company predicts that there will be about 80,000 more stores—9 percent of the nation’s total—that will close over the next five years as e-commerce sales grow. More than 60 major retailers have filed for bankruptcy or closed their stores: Brooks Brothers, J. Crew, Guitar Center, Pier 1, Sears, Lucky Brand, Forever 21, Circuit City, Payless Toys R Us, Bed Bath & Beyond and Victoria’s Secret to name just a few. And although Amazon reports an inventory of over 12 million items across all its categories, department stores are broken. It’s “just a format that does not work anymore,” said Chris Kuiper, an analyst at CFRA Research. “People don’t want to wade through a four-story megastore to find a couple of items.” Roughly 40 percent of the nation’s department stores have closed since 2016.
And when it comes to malls, Coresight Research estimates that a quarter of the remaining 1,000 malls will close over the next 3 to 5 years. You know that Oreo store that Sally was talking about? Well that’s located in East Rutherford NJ and cost $5 billion – its called the American Dream and was opened in 2019 with an indoor ski slope, a water park and a roller coaster and was hyped as the future of retail. Now, not so much as 3 of its retail anchors – Barney’s, Lord & Taylor and Century 21 all went out of business during the pandemic. Kurt Hagen, an executive with mall owner Triple Five, told The Week “it would have been much better if American Dream had burned down or a hurricane had hit it.” So what’s going to happen to what was once a viable thriving community center? According to a Coresight Research analysis Amazon turned some 25 shopping malls into distribution warehouses between 2016 and 2109 and over the past eight months, Amazon has begun setting up distribution centers in former malls in Baton Rouge, Knoxville, and Worcester, Mass. Perhaps locations for future Amazon Fresh stores as well?