More and more battered American apparel retail stores at both ends of the price spectrum are forced to close their doors, while Amazon collects the pieces of the business cake.
The year-to-date store closings are already out pacing those of 2008. The rapid descent of so many retailers has left shopping malls with hundreds of slots to fill. More than 10% of the US retail space may need to be closed or converted to other uses or renegotiated for lower rents in coming years, according to Bloomberg.
The blight is also taking its toll on employment developments. According to the Labor Department figures are showing that retailers have cut 30.000 jobs in March 2017.
The Payless Inc. shoe chain filed for bankruptcy and announced plans to shutter hundreds of locations, while Ralph Lauren said it will close its flagship Fifth Avenue Polo Store, which prompted to be an old-fashioned luxury that no longer resonated with today’s shoppers.
The teen apparel retailer, Rue 21 Incorporation could be the next casualty. The chain, which has about 1.000 stores, is preparing to file for bankruptcy this month. Just a few years ago it was sold to private equity firm Apax Partners for about a billion dollars.
The shopping malls created a bubble, and like housing, that bubble has not burst. Malls added way too many stores in recent years. Now they have to find a way to reinvent themselves. Doors are shuttering and rents retreating. This trend will continue for the foreseeable future and may even accelerate.
But even brands moving aggressively online have struggled to match the growth of the market leader Amazon.com Inc. While high-end malls continue to perform well, the exodus away from brick-and-mortar stores is taking a toll on so-called C & D-class shopping centers.
There are roughly 1.200 malls in the USA, and those lower classes represent about 30% of the total. The glut of stores is far worse in the USA than in other countries. For now Amazon rules the retail e-commerce trade growth.
Amazon controls 53% of the market, while the 47% is shared by everyone else.
Bloomberg / AA-Magnum News 2017.