The fear of an impending “retail apocalypse” is overblown with store openings outpacing closings in 2018 by nearly 4,000 and just a “handful” of retailers responsible for most of the losses, according to a new report from IHL Group.
“There has been a great deal of negative press about retail in the last two years,” Greg Buzek, president of the research and advisory firm told Chain Store Age. “Overall, retail is very healthy… But there are vast differences in retail segments with some growing rapidly and others struggling.”
The report looked at data from more than 1,500 retailers and found that 16 stores represented about two-thirds (66 percent) of all retail store closings, including the much-publicized closing of more than 200 Toys ‘R’ Us locations in June. Retailers will open 12,663 stores and close 8,828 stores in 2018, per the report.
“We can’t emphasize enough that the closings have been driven by a handful of retailers, not the entire market,” the report, Retail’s Radical Transformation/Real Opportunities, stated.
Off-price retailers, dollar stores, grocery stores and restaurants are seeing growth while apparel and department stores struggle, the report showed.
For example, Tennessee-based discount-priced variety store Dollar General has added more than 1,100 stores in the past year, per CNN. Even though U.S. economic growth in the second quarter showed its best performance in nearly four years, people are still looking for “value and convenience,” the company told CNN.
The study found that many of the closed stores were mall-based apparel locations impacted by the growth of off-price fast-fashion retailers like Zara and H&M, while the breakout of cosmetics and beauty into standalone categories also impacted mall sales.
The report also noted the growing influence of Amazon, noting that brick and mortar stores can no longer get away with being out-of-stock on items, as more than 24 percent of Amazon sales can be attributed to customers who first tried to buy the product at a local store, per CSA.