STORES Magazine - January 2018 - 23

the "retail apocalypse" and the "retail meltdown
of 2017" that resulted from "sagging sales in the
troubled sector."
Photos and videos of stores holding liquidation
sales fuel the inaccurate narrative. Large malls
have been shuttered in a number of cities, and
household names like Sears, JCPenney, Macy's,
Radio Shack and Kmart are together closing
thousands of locations; in late October, the retail
think tank Fung Global Retail & Technology says
that announced closures since the start of 2017
could be the most on record in a single year.
But what looks like doom on the surface is simply
part of the industry's evolution, experts say. Excess
retail space built out during the past couple of
decades, changing consumer trends and the rise of
omnichannel have significantly changed the ways
in which retail is transacted.
If it's hard to see that retail is doing well, it's
because the industry looks quite different than it
did a decade ago.
"There are people saying the retail industry
is dead," says Mark Cohen, director of retail
studies at Columbia Business School. "The retail
industry is just fine. The economy is, from many
vantage points, completely healthy. What is
happening is that the players in the marketplace are
in disruption."
Mark Mathews, vice president of research
development and strategy at the National Retail
Federation, says disruption is changing retail so
rapidly that it's hard to measure the sector in the
same ways as in the past. As retail is increasingly
conducted through multiple physical and digital
channels, store closures aren't necessarily a sign of
distress but a sign of change.
"Nobody is quite sure how to measure the
industry," Mathews says. "But all those old metrics
and measurements that made sense 10 or 15 years
ago no longer make sense."
MISINTERPRETED DATA
Store closings are not abnormal; IHL data
shows 14,000 new-store openings in the past year,
compared with 10,000 store closures - that's a net
of 4,000 new stores opened in 2017. The categories
with the most openings were convenience stores,
mass merchandisers, fast-food establishments and
supermarkets. Specialty soft goods and department
stores saw the most closures.
Meanwhile, CNNMoney.com claimed in May
that "department stores have lost more jobs than
coalmines," and CNBC.com proclaimed the more
than 11,000 job losses in April 2017 a "bloodbath
in retail." While Bureau of Labor Statistics data
STORES.ORG

indicates that retail is down over the past six
months, it is still well above its prerecession figures,
Mathews says. The biggest issue is that the way jobs
are calculated doesn't reflect the shifts happening in
the retail sector.
The Census Bureau uses the North American
Industry Classification System, which only counts
employees who work in stores as "retail." Retail
company employees who work in retail warehouses,
distribution centers, call centers, regional centers and
headquarters are often classified in other sectors.
"You have all these retail companies that are
investing in ecommerce that are logistically
restructured," Mathews says. "They're building
warehouses, hiring drivers, and none of that is being
counted as retail employees or represented in the
data. What you are seeing being counted is mostly
just store employees."
The Wall Street Journal reported in April that
retailers and logistics companies have been
opening warehouses at a record pace and staffing
them with "armies" of pickers to process orders.
According to BLS data, the warehouse and storage
sector in March 2017 was up 5 percent from the
previous year.
Amazon now employs more than 90,000 full-time
workers in its fulfillment network and announced
plans to hire an additional 25,000 part-time workers
over the next year.
"The job losses add to the narrative that retail is in
trouble," Mathews says, "but you have to consider
the way jobs are measured. Many of these jobs are
moving [to other areas]."
SHIFTS IN SPENDING
While experts debate its meaning, there's little
doubt that retail is changing in profound ways.
Over the past decade, consumers have shifted
more of their shopping online for convenience or
cost savings. Online sales still constitute less than
10 percent of all retail sales, according to the
Census Bureau, but while retail is growing at a
rate of 4 percent, ecommerce is growing at a rate
of 16 percent.
Cohen says the narrative is partly rooted in the
fact that changes are happening so quickly; the
rapid transition to the digital marketplace and the
fact that stores were "overbuilt" at unsustainable
levels led to the need to start culling some locations.
A 2016 report by Green Street Advisors says that
department stores would have to close even more
locations to reach the levels of productivity they
experienced in the past.
Most of the 250 "AAA" malls are doing well,
Cohen says. It's mostly excess retail space and poorly

As retail is
increasingly
conducted
through multiple
physical and
digital channels,
store closures
aren't necessarily
a sign of distress
but a sign of
change.

STORES January 2018 23


http://www.CNNMoney.com http://www.CNBC.com http://www.STORES.ORG

Table of Contents for the Digital Edition of STORES Magazine - January 2018

Editor’s Page
President’s Page
Retail Politics
NRF News
TRENDS
Retail People
Disruption Is the New Normal in Retail
20 Ideas Worth Stealing
Drug Store Cowboy
C2W
TECHNOLOGY
WORKFORCE MANAGEMENT
OMNICHANNEL
AI
MARKETING
FINANCE
BUSINESS OPERATIONS
STARTUP SPOTLIGHT
SECURITY
HUMAN RESOURCES
POV
Communities
End Cap
STORES Magazine - January 2018 - intro
STORES Magazine - January 2018 - cover1
STORES Magazine - January 2018 - cover2
STORES Magazine - January 2018 - 3
STORES Magazine - January 2018 - 4
STORES Magazine - January 2018 - 5
STORES Magazine - January 2018 - Editor’s Page
STORES Magazine - January 2018 - 7
STORES Magazine - January 2018 - President’s Page
STORES Magazine - January 2018 - 9
STORES Magazine - January 2018 - 10
STORES Magazine - January 2018 - 11
STORES Magazine - January 2018 - Retail Politics
STORES Magazine - January 2018 - NRF News
STORES Magazine - January 2018 - TRENDS
STORES Magazine - January 2018 - 15
STORES Magazine - January 2018 - 16
STORES Magazine - January 2018 - 17
STORES Magazine - January 2018 - 18
STORES Magazine - January 2018 - 19
STORES Magazine - January 2018 - Retail People
STORES Magazine - January 2018 - 21
STORES Magazine - January 2018 - Disruption Is the New Normal in Retail
STORES Magazine - January 2018 - 23
STORES Magazine - January 2018 - 24
STORES Magazine - January 2018 - 25
STORES Magazine - January 2018 - 20 Ideas Worth Stealing
STORES Magazine - January 2018 - 27
STORES Magazine - January 2018 - 28
STORES Magazine - January 2018 - 29
STORES Magazine - January 2018 - 30
STORES Magazine - January 2018 - 31
STORES Magazine - January 2018 - 32
STORES Magazine - January 2018 - 33
STORES Magazine - January 2018 - 34
STORES Magazine - January 2018 - 35
STORES Magazine - January 2018 - Drug Store Cowboy
STORES Magazine - January 2018 - 37
STORES Magazine - January 2018 - 38
STORES Magazine - January 2018 - 39
STORES Magazine - January 2018 - C2W
STORES Magazine - January 2018 - TECHNOLOGY
STORES Magazine - January 2018 - 42
STORES Magazine - January 2018 - 43
STORES Magazine - January 2018 - WORKFORCE MANAGEMENT
STORES Magazine - January 2018 - 45
STORES Magazine - January 2018 - OMNICHANNEL
STORES Magazine - January 2018 - 47
STORES Magazine - January 2018 - AI
STORES Magazine - January 2018 - 49
STORES Magazine - January 2018 - MARKETING
STORES Magazine - January 2018 - 51
STORES Magazine - January 2018 - FINANCE
STORES Magazine - January 2018 - 53
STORES Magazine - January 2018 - BUSINESS OPERATIONS
STORES Magazine - January 2018 - 55
STORES Magazine - January 2018 - STARTUP SPOTLIGHT
STORES Magazine - January 2018 - 57
STORES Magazine - January 2018 - SECURITY
STORES Magazine - January 2018 - 59
STORES Magazine - January 2018 - 60
STORES Magazine - January 2018 - HUMAN RESOURCES
STORES Magazine - January 2018 - 62
STORES Magazine - January 2018 - 63
STORES Magazine - January 2018 - POV
STORES Magazine - January 2018 - Communities
STORES Magazine - January 2018 - End Cap
STORES Magazine - January 2018 - cover3
STORES Magazine - January 2018 - cover4
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