Report debunks retail apocalypse: More stores opening than closing
Don't believe the hype — physical retail is still growing, particularly in three key segments.
Retailers are opening 4,080 more stores in 2017 than they are closing, according to a new research report from IHL Group, and they plan to open over 5,500 more in 2018. Mass-merchandisers, including off-pricers and value chains, are the fastest-growing retail segment (+1,905 stores), followed by convenience stores (+1,700 stores) and grocery retailers (+674 stores).
The research for the report, “Debunking the Retail Apocalypse,” reviewed more than 1,800 retail chains with more than 50 U.S. stores in 10 retail vertical segments. It found that for every chain with a net closing of stores, 2.7 companies showed a net increase in store locations for 2017.
In one of the report's most interesting findings, just 16 chains account for 48.5% of the total number of stores closing. And five of these 16 retailers (RadioShack, Payless ShoeSource, Rue21, Ascena Retail and Sears Holdings) represent 28.1% of the total closings.
"The negative narrative that has been out there about the death of retail is patently false,” said Greg Buzek, president of IHL Group. “The so-called ‘retail apocalypse’ makes for a great headline, but it’s simply not true. Over 4,000 more stores are opening than closing among big chains, and when smaller retailers are included, the net gain is well over 10,000 new stores."
Highlights of the research include:
• The total net increase of stores for 2017 is 4,080, including retail and restaurants. Core retail segments will see a net gain of 1,326 stores, while table-service and fast-food restaurants are adding a net of 2,754 locations. In total, chains are opening a net 14,239 stores and closing 10,123 stores.
• 42% of retailers have a net increase in stores, only 15% have a net decrease, and 43% report no change.
• Specialty apparel retailers are seeing the largest number of closings, with a net loss of 3,137 stores. Yet, for every chain closing stores, 1.3 chains are opening new stores.
• “Without question, retail is undergoing some fundamental changes. The days of ‘build it and they will come’ are over,” added Buzek. “However, retailers that are focusing on the customer experience, investing in better training of associates and integrating IT systems across channels will continue to succeed.”
"Debunking the Retail Apocalypse" was underwritten by AT&T, Cayan, Fujitsu, Aptos, Level 10, Adspace, and Veras Retail. The research is available at ihlservices.com.
The Hype is, most times wrong, or at least, not the whole story! As your insights and experience have shown us the Retail Industry is an Industry that is tied to the Consumer! We reflect the Needs, Interests, and Trends our Consumers are following and will be wanting! Retail is a reflection of the consumer's dynamic Interests. Those that listen and respond with insight and experience that is founded in Consumer Experience will live to grow, those doing the same thing again and again and think it will still work are left to a spiraling demise! Well said, Chuck!!
This article needs to be debunked - talk about a misleading headline. You never make yourself look smart by trying to make others look dumb. But this article will nevertheless be mindlessly spread as being news - it is as fake news as any other. This part is right: “Without question, retail is undergoing some fundamental changes. The days of ‘build it and they will come’ are over,” added Buzek. “However, retailers that are focusing on the customer experience, investing in better training of associates and integrating IT systems across channels will continue to succeed.” The rest is misleading. Like Mark Twain said, 'There are three kinds of lies, lies, damn lies, and statistics." The key fact is right there but they choose to ignore it. Restaurants are technically retail, but are not stores. Core retail segments will see a net gain of only 1,326 stores, while table-service and fast-food restaurants are adding a net of 2,754 locations. Specialty apparel alone closed 3,137 - SO FAR. 67.5% are restaurants. Only 32.5% are core retail. Retailers are scurrying to survive, playing the deadly game of opening stores to create volume, while same store sales struggle (which is why they are closing stores at the same time as opening new one). - Fastest growth is in new retail concepts and expansions that are disruptive to others. Aldi's announcement of adding 750 stores is an example of this (and beginning home delivery). A large part of the net gain will be dollar store format, hardly a core retail experience. - The net growth game is an old game coming back to life. It is a veil disguising problem and issues from owners and investors. It allows them to remove the worst underperforming locations, and when also adding new stores still pull out revenue and sales growth. But it doesn't solve the underlying problems. -Many of the new stores are leveraging Omnichannel opportunities. Aldi's is one. Home Depot and Lowe's are also doing this in all their stores and it is the plan in the new locations. - Most chains have not saturated the entire country, having opportunities to open stores in new markets, even thought they will also suffer in those areas. Read deeper and see what else you see.
Spin, spin, spin. The biggest growth segment includes off-price stores of various kinds, itself a sign that the retail apocalypse is growing. It will only get worse once Sears & Kmart finally go belly-up.
this story is full of b s. Many more retailers are going under this year. Supermarkets are down sizing. many more mom and pop stores are closing , dining establishments are closing from chains to local to mom and pop. Seems the writer of the article left this importand facts out.