Disruption: Store Closures Rise 200% In 2017, More Coming In 2018

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This year saw some 7,000 retail stores shuttered, thanks to online shopping and in particular, Amazon; 2018 could be another banner year for closings, driving many malls to extinction as well. Most retailers are certainly not Technocrats, but Amazon is and it is intent on decimating the entire retail industry in America.  ⁃ TN Editor

A larger-than-average slew of retail bankruptcies and stores being shuttered rocked the industry this year, making headlines and dragging even some of the better-performing companies such as Home DepotTJ Maxx and Costco down with the dismal news.

So far in 2017, 6,985 store closure announcements have been made, according to a tracker from FGRT (formerly Fung Global Retail & Technology). That’s up more than 200 percent from a year ago, based on the firm’s findings.

“Store closures are a major theme in U.S. retail, as many overspaced retailers are reacting to the migration of sales online by closing physical locations,” FGRT’s Deborah Weinswig wrote in a recent note to clients.

Still, shoppers may not yet realize the full impact of these changes. While announcements were made by retailers such as Charming Charlie, PerfumaniaCrocs and GameStop, among others, some have yet to shutter their doors. The closure may not come until 2020, in some cases.

Ascena Retail Group, for example, which owns names such as Dressbarn, Loft and Ann Taylor, could close as many as 667 stores by mid-2019, depending on how negotiations pan out with U.S. mall and shopping center landlords.

Heading into 2018, some of those landlords feel as if they have more authority and won’t allow retailers’ doors to close without a fight.

A recent court ruling in favor of the largest U.S. mall owner, Simon Property Group, blocked Starbucks from closing all of its Teavana stores across Simon’s properties as planned. Instead, Starbucks must adhere to an operating covenant within their contracts.

The news sparked cheers from other retail real estate investment trust CEOs, which discussed the implications at a recent conference arranged by the International Council of Shopping Centers in New York, applauding Simon.

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