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Brick-and-Mortar Stores in U.S. Closing Rapidly

May 1, 2017

News about the retail industry tends to crop up around the holidays, but if you look around, you’ll notice there is a lot going on with retail stores across the country – as in, a lot of them are closing.

 

Almost 3,000 store closings have been announced so far this year, and we’re already outpacing what happened in 2008 (our last recession), when 6,200 stores closed. We’re on track for 8,600 in 2017.

 

Look at this chart from Business Insider and you’ll see how wide-ranging these closures are:

 

 

 

 

 

 

 

 

 

 

 

Back to the holidays – the only holiday sales numbers that impressed were from Amazon. So we can draw from this that Amazon is eating up brick-and-mortar operations, especially where comparing prices is easy. That’s true with electronics, shoes and clothing (the top three retailers on the chart above).

 

Malls are feeling the effect of this trend. Tenants are leaving, shoppers are staying home, and sales will keep dropping to the point that malls will close en masse. When that happens, the surrounding neighborhood property values drop. There are more than 1,200 shopping malls in the U.S. today, which is likely too many. They grew at twice the rate of the population from 1970-2015, while mall visits have declined by half from 2010-13, and have been falling since.

 

We’re clearly in the midst of a retail shift. Will the brick-and-mortar enterprise have a place in the new economy? Probably on some level, but not at the scale we’ve seen in the past. I would advise using any gift certificates/cards you have now, they may be worthless in the near future.

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