STORES Magazine - January 2018 - 24

n

COVER STORY

"You have all
these retail
companies that
are investing in
ecommerce that
are logistically
restructured.
They're building
warehouses,
hiring drivers, and
none of that is
being counted as
retail employees
or represented in
the data."
- Mark Mathews, National
Retail Federation

24

STORES January 2018

performing malls and stores that failed to evolve
that are closing.
Mathews says many of the major store closings
aren't necessarily representative of the entire retail
sector. Much of the bricks-and-mortar retail
business is comprised of smaller retailers with
fewer than 100 employees, and even at national
mass-merchandise retail chains, things are
"incredibly positive."
"If you look at things locally, it's not sound,"
Mathews says. "But if you look at overall retail on
a national level, the big picture is looking positive."
Greg Maloney, chief executive of the Americas
Retail division at JLL, says ecommerce has "woken
up the sleeping dog." Retailers have typically
operated in the same fashion for decades, having to
do little more than open their doors, advertise their
products and build new locations. Some were slow
to react and waited until they started to feel the
pain, at which point it was simply too late.
"I think that's why you've seen some of the
[retailers] either file for bankruptcy or close stores
in the past few years," Maloney says. "It happened
so quickly - they got so beyond trying to compete
effectively in the marketplace - it was just easier
to shut down."
FAILURE TO EVOLVE
Retailers typically close thousands of stores
every year, rebalancing their portfolios by
closing underperforming stores while opening
new locations. A growing trend since the Great
Recession is to cut losses by closing poorly
performing stores more quickly rather than letting
them linger for years. What has captured the
nation's attention more recently are closures of
high-profile brands.
Yet some of these closings aren't necessarily due
to a lack of consumer spending or competition
from the web but because of a company's failure to
evolve. Jeff Roster, vice president of retail strategy
for the IHL Group, says many of these stores
are "out of touch" with merchandise selection,
aren't capitalizing on younger generations
and don't engage consumers in their preferred
shopping habits.
Radio Shack and Payless Shoe Source, which
represent 1,700 of the announced store closings
in 2017, have barely changed stores or business
models since the 1980s, according to Roster. And
he says Sears, which has announced 300 closures
of Sears and Kmart locations, hasn't been able to
engage modern, technology-driven consumers.
Meanwhile, specialty retailers have been
siphoning off some segments of business with

better offerings and a superior, updated digital
experience. Department-store product categories
such as cosmetics have been nearly "devastated"
by specialty retailers like Ulta and Sephora,
Roster says.
"That's about $8 billion [in annual revenue] that
used to sit in department stores," he says. "The
challenge is how do they remain relevant when the
market begins to specialize?"
BLURRING THE CHANNELS
The common narrative in many of the news
stories is that bricks-and-mortar closings are being
driven by cutthroat competition from Amazon.
Roster says "virtually every retailer" is now
competing with Amazon, but it's difficult to justify
saying it's killing off bricks-and-mortar when
e-tailers are establishing physical footprints and the
top 10 ecommerce players are traditional retailers
that sell online as well as in stores.
"The idea that ecommerce is killing
bricks-and-mortar is a fallacy," Roster says. "What
is killing bricks-and-mortar is [retailers] that don't
understand ecommerce or invest in the concept
or technology."
Bricks-and-mortar retailers are expanding their
digital channels, while online retailers are starting
to dabble in physical spaces. Roster says Amazon's
acquisition of Whole Foods Market will make it a
"radically different" store within a few years; while
it still will focus on the core Whole Foods customer,
it also will grow into an Amazon "dropbox" and
be used as way to "get as close to the customer as
possible."
Closing stores can be part of a strategy to
optimize omnichannel growth. IHL noted that even
"healthy" retailers may close 1 percent to 3 percent
of their underperforming stores each year. While
ecommerce is pressuring some stores, it's also
offering new opportunities for others.
Roster says cloud computing, Software-as-aService solutions and other technologies are leveling
the playing field, giving small retailers the same
access to the market as the leading players. There's
an "opportunity like we've never seen before in
history," he says, for small retailers that learn to
optimize both their physical and digital channels.
Robert Gregory, global research director at
PlanetRetail RNG, says that while physical stores
"aren't dead," they are being pressured to reinvent
themselves to align with modern shoppers.
Some of the traditional roles of a physical
store - learning about products, price shopping
and fulfillment - are now being handled by
online channels.
STORES.ORG


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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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