America’s big retail chains are snipping off large chunks of mainstreet retail space as shoppers continue to head online.
Image above: In what used to be prime retail space on Queen St in Auckland, discount shops were promoting pre-Christmas sales, with a street beggar one door down.
Even after the closures, though, the US will have far more retail space per capita than New Zealand, where the opening of new malls has always been accompanied by comparisons with Australia & the US showing how poorly served we’ve been.
Some New Zealand retailers have succeeded online while others have maintained their physical presence as their main, or entire, business. But the weakness of mainstreet retail is glaringly apparent when discount shops (pictured) take up what used to be prime Queen St space – right at the spot where annual pedestrian surveys showed Auckland foot traffic was its heaviest – and add to the insult by heavily promoting pre-Christmas sales.
Further down towards the foot of Queen St, exclusive foreign retailers have taken up glittering space intended for exclusive – mostly cruise passenger – shoppers, with the doors firmly closed to locals.
The disarray in the US retail sector was highlighted last week by closure announcements for large numbers of Macy’s, Kmart & Sears outlets.
CNN Money noted the disparity between the market value of online retailer Amazon compared to 10 of the biggest names in mainstreet & mall trading. Amazon has a market value of $US370 billion – 4 times more than the combined $US95 million value of Macy’s, Kohl’s, Sears, JCPenney, Nordstrom, Best Buy, Barnes & Noble, Dillard’s, Gap and Target. Take away Target’s $US40 billion, and the other 9 are worth a combined $US55 billion.
Sears announced it was shutting 150 more stores, including 108 Kmarts, on top of 78 closures in 2016 and over 200 in 2015. From sales of $US1.2 billion over 12 months, the 150 stores about to close lost $US60 million.
Sears Holdings said in a release: “The decision to close stores is a difficult but necessary step as we take actions to strengthen the company’s operations and fund its transformation. Many of these stores have struggled with their financial performance for years and we have kept them open to maintain local jobs and in the hopes that they would turn around. But in order to meet our objective of returning to profitability, we have to make tough decisions and will continue to do so, which will give our better performing stores a chance at success.”
Macy’s Inc is closing 68 of its 880 stores (3 already shut). It expects to lay off about 3900 staff as a direct result, and to axe another 6200 jobs as it streamlines its management team.
It expects the initial closures to generate savings of $US550 million/year, enabling it to invest an extra $US250 million in growing the digital business, store-related growth strategies, Bluemercury, Macy’s Backstage & China.
Macy’s Inc chair & chief executive Terry Lundgren said: “Our plan to close about 100 stores over the next few years is an important part of our strategy to help us right-size our physical footprint as we expand our digital reach. We are closing locations that are unproductive or are no longer robust shopping destinations due to changes in the local retail shopping landscape, as well as monetising locations with highly valued real estate.”
CNN Money, 6 January 2017: Amazon worth more than Sears, Macy’s and Target combined
CNN Money, 5 January 2017: Sears and Kmart closing 150 stores
CNN Money 4 January 2017: Macy’s job cuts
4 January 2017: Macy’s release
Attribution: CNN Money, Macy’s, Sears.