Retail bankruptcies continue.
In the last year alone, Sears, Payless ShoeSource, Roberto Cavalli, Diesel USA and Barneys New York have all filed for bankruptcy. Charlotte Russe and Shopko stores have liquidated. Rumors are swirling that Forever 21 is next in line.
“I don’t think you can write off traditional retail,” Jenny Ming, Poshmark board member and former chief executive officer of Charlotte Russe, told WWD. “It’s just going to be part of other stuff. It’s not going to be the big pie. Now the pie is cut into so many other business models and channels and engagement. But traditional retail is not going away. [Physical stores are] just going to be a smaller part, because there are now so many other parts that consumers can engage with and buy.”
Still, it’s hard to ignore the numbers as store closures continue to add up. As of July 31, there were already 7,567 closures, compared with just 5,524 in all of 2018, according to a report by Coresight Research. Apparel specialty stores had the most closures, with Payless and Dressbarn leading the pack.
But the same report pointed out that retailers — like American Eagle Outfitters’ Aerie, ThirdLove, Warby Parker, J. Crew’s Madewell and Tilly’s, among others — have revealed plans to open or have opened stores this year. In fact, there have been more than 3,000 physical store openings revealed in 2019.
Brick-and-mortar stores seem to be one piece of a larger retail formula; one that includes stores, online operations and wholesale channels.
Fabletics, which opened its first physical store in Manhattan last April, has 34 retail locations — either opened or planned for later this year —throughout North America.
“Even if you’re a digital native, at some point you’re going to want people to have the shopping experience,” Hudson added. “And as a digital native, it’s important that you’re creating a community.”
And it’s not just digital natives moving off-line. Puma, Target, T.J. Maxx, New York’s Lafayette 148 and Abercrombie & Fitch’s lingerie brand Gilly Hicks have all opened stores or extended pop-ups in 2019. Hudson Yards, the largest private real estate development in New York City since Rockefeller Center, opened last March. Lululemon Athletica opened a 20,000-square-foot experiential store in Chicago this summer. Nordstrom’s much-awaited women’s flagship in Manhattan is slated for this fall. Urban Outfitters is opening stores in Europe.
Burlington Stores, which recently opened seven new stores, ending last quarter with 691 physical locations, has plans to open more.
“One thousand stores is definitely in our reach,” Thomas Kingsbury, chairman and ceo of Burlington Stores, told analysts on the most recent conference call.
And with so many other retailers shuttering doors — some in prime locations — Kingsbury called the current real estate environment “very favorable.”
That could be good news for mall owners — like Simon Property Group and Brookfield Property Partners — who have been scrambling to find new tenants in the last year. If Forever 21 does file bankruptcy, there will likely be more vacancies.
On the flip side, retailers could potentially snag substantially discounted leases in the process.
“I’m a big fan of stores,” Chad Kessler, global brand president of American Eagle, said. “I think they’re great for customers, for brand relevance, for brand awareness. Having a large fleet of stores keeps us top of mind.”