Online Shopping

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. 

All of these bankruptcies have led to an overwhelming number of store closures. (Retailers often use bankruptcy as a way to get out of expensive leases and reevaluate their store fleets.)

Amid all the downsizing, the prevailing belief is that physical stores are out of fashion in the age of Amazon and online shopping. But some retail veterans would disagree. 

“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 OutfittersAerie, 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. 

Fabletics store

The Fabletics store at the Village at Westfield Topanga in Los Angeles.  Howard Tucker

Brick-and-mortar stores seem to be one piece of a larger retail formula; one that includes stores, online operations and wholesale channels.

“What we’ve found at Fabletics is that people do want to see the product. They want to feel it,” said Kate Hudson, actress and cofounder of Fabletics, the ath-leisure brand born online.

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.”

Pedestrians cross Tenth Avenue near Neiman Marcus the retail store before the Hudson Yards Grand Opening Ceremony at Hudson Yards in New York, New York, USA, 15 March 2019. Hudson Yards is a real estate development on Manhattan's westside in the neighborhood of Chelsea, which will feature both residential and commercial space along with retail shopping, fine dining, a ten screen movie theater, a public school, and artist exhibition space.Grand Opening Hudson Yards New York, USA - 15 Mar 2019

The new Neiman Marcus at Hudson Yards in New YorkPETER FOLEY/EPA-EFE/REX/Shutterstock

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.” 

load comments
blog comments powered by Disqus