What Sears and Kmart closings tell us about the future of retailing

Is this the future of retailing in America?

Yes, and NO.

On Wednesday, Sears/Kmart announced another round of store closing that are hitting close to home.

Sears is adding 16 more stores to the 180 already announced that they plan to close in 2017.

 

A Sears Holdings official said, “We have been strategically and aggressively evaluating our store space and productivity and have accelerated the closing of unprofitable stores as previously announced.”

 

The company also runs Kmart stores and announced the closing of 49 of their remaining locations.

As these national retailers wind down in the U.S., consumers have to wonder who is next.

This spring, Moody’s identified 19 national chains that are in danger.

Sears and Kmart owner Sears Holdings (SHLD), J. Crew, Payless, Claire’s, Rue21, Gymboree, Toms Shoes, David’s Bridal and Totes.

But larger retailers like Macy’s and Targets have reported poor earnings this year.

So will they all go under as we continue to shop on Amazon?

Here is a reality check from a Forbes expert in May.

If you follow retail at all you’ve no doubt read multiple recent stories claiming that we are in the midst of a “retail apocalypse.” Like Chicken Little, these journalists and pundits see the sky falling on physical stores and a veritable tsunami of store closings, mall foreclosures and bankruptcies. I imagine they also expect a plague of locusts to descend upon us at any minute, as darkness covers the land.

Of course, this is all nonsense. The reports of traditional retail’s death are, to paraphrase Mark Twain, “greatly exaggerated”–as several esteemed colleagues have rightly pointed out. Barring an asteroid hitting Earth, the vast majority of retail will still be done in brick & mortar stores for a long, long time. Most of the major retail brands we know and love will remain household names. Hundred of regional malls will not only survive but continue to do quite well, thank you.

1) There is a retail bubble, just like the housing bubble ten years ago. We are “over-stored and over-malled” in the U.S. right now. So expect more failures.

2) HOWEVER, retail is still growing and new stores are still opening. But the growth is in off price/dollar stores and the new big chain stores are smaller.

3) The new retail that is working focuses on “experiencial improvements.” And malls are “reformatting” with new technology, automated retailing, and self-service kiosks.

Still, his conclusion is that brick and mortar stores will be with us for a long time to come.

Just the names will change as the old guard passes away.

 

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