Retail apocalypse – truth vs. myth

Aug 22, 2019
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Written by Rose Gundersen, VP of Operations & Retail Services
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Inside Washington Retail

Headlines about retail store closures and department store bankruptcies in recent years have portrayed an impending “retail apocalypse” impression on the general public. This impression is a myth, according to the recent “Retail Renaissance – A Growth Story” research report.

In fact, for every chain closing stores, 5.2 chains are opening new stores.

The “Retail Renaissance” report provides rich research-based data to debunk the retail apocalypse headlines. Washington Retail believes our audience deserves to hear some of the upbeat data gathered from a recent webinar offered by the IHL Group that conducted the research:

  • Closures do not reflect a systemic problem with the retail industry.
    • 12 of the 14 largest retail apparel bankruptcies in the last 10 years are due to private equity mismanagement of debt and overexpansion.
    • Other common failure reasons for individual retailers include not staying current with customers’ needs, failure to innovate and poor inventory management.
  • Store closures are category-specific. The most hard-hit categories are department stores and specialty retailers of soft goods. Consequently, malls are hit hard due to losing anchor department stores.
  • Store openings also are category-specific. The top three categories of store openings are superstores/wholesalers, convenience stores and drug stores.
  • Estimates for 2019 core retail store activity gainers are at least 20% higher than 2018.

The research also offers a few bottom-line recommendations to malls and retailers:

  • Invest to win: keep your stores up-to-date; keep your eyes on inventory management.
  • Connect with your customers especially when they come to the store. Customers come to the store to get the items now and to gain knowledge and experience with products.
  • Invest in technology and data to inform your business decisions.
  • To attract more shoppers, malls need to expand their infrastructure offerings to retail tenants and diversify their tenant base, especially non-traditional stores.

Data tell the real story about the thriving and shifting retail industry. These times remain exciting for retail!