As consumer spending habits keep moving toward e-commerce options, how we shop is in flux.
On Tuesday, Barneys New York was the latest casualty, announcing 15 of its 22 locations were closing. The stores affected include big-city branches in Chicago, Las Vegas and Seattle. “Like many in our industry, Barneys New York’s financial position has been dramatically impacted by the challenging retail environment and rent structures that are excessively high relative to market demand,” said Daniella Vitale, Barneys CEO and president, in a statement.
The “challenging” environment is hitting more stores this year. A report from the firm Coresight Research counted 7,567 closures to date in 2019, eclipsing the 5,864 places that shuttered in 2018. Coresight estimates 12,000 stores will close by the end of the year.
But a separate report from the firm CoStar Group notes that while the count of closed stores is higher, the quantity of vacant space is smaller—around 72 million square feet in 2019, versus 110 million square feet last year. An analyst told the Chicago Tribune that’s a bright side considering increased interest in filling more manageable spaces than department stores.
Virginia has seen some notable big-box losses this year. In January, the Sears at Virginia Center Commons in Glen Allen shut its doors. In April, the Nordstrom at MacArthur Center in Norfolk did the same. Smaller closures include LifeWay Christian Stores (Henrico and Chesterfield), Gymboree (Short Pump Town Center) and the Walmart on VCU’s Monroe Park campus.
“Looking at the needs in these markets and the investments needed to sustain these stores, we decided it made the most sense to close these stores and focus on other ways we can best serve our customers, including nearby Nordstrom and Nordstrom Rack stores as well as online,” said Jamie Nordstrom, president of Nordstrom stores, in a statement on the Norfolk closure earlier this year.
More stores are poised to shutter, but how fast? In April, UBS analysts estimated that for every 1 percent increase in online sales, 8,000 to 8,500 stores would perish. The share of e-commerce within overall retail sales was 16 percent, so the firm predicted another 75,000 locations could close by 2026.
The National Retail Federation contended the UBS study was flawed, arguing web merchants could add brick-and-mortar stores. For example, popular eyeglasses company Warby Parker started online in 2010, but now operates about 100 in-person locations. Even Amazon, the leader in e-commerce sales, has invested in stores for books, 4-star products and grab-and-go food.
Either way, “looking forward, we believe that store rationalization needs to accelerate meaningfully as online penetration continues to rise,” wrote lead UBS analyst Michael Lasser in April.
In Richmond, we hope that vision is achieved with ambitious plans to revitalize Regency mall. The days of needing a two-store Macy’s combo are gone. But ideas like apartments and an aquatics center might drive the modern hopes of Regency’s new owners, who want the place to be “cool again.”
Commerce isn’t going away. While the mechanisms by which we spend might change, a forward-thinking future should look beyond the grim counts of stores closing.