In a brutal environment, retail chains continue to shutter hundreds of store locations even as ecommerce growth continues to boom.
Sears, Macy’s and Kohls are among several department store chains that have announced they would be eliminating stores and jobs.
Sears announced its second wave of store closures bringing the total to 150 stores for early 2017, according to Yahoo Finance.
The company will also close 108 Kmart stores and 42 Sears stores by April, representing 10% of Sears Holdings’ store base. There were 46 store closures announced before the New Year, with the remaining store closures announced this week.
Macy’s plans to close more than 60 stores and eliminate 10,000 jobs this spring due to weak store sales, according to Fortune. The company’s same-store sales fell 2.1% in November and December combined, representing the critical holiday season.
Of the 10,000 jobs being cut, 3,900 will be from stores being closed this year as part of a plan that was originally announced in August. In August, Macy’s said it would close 100 full-line stores and planned to invest in existing full-line stores with improvements to its digital channels.
Another 6,200 job cuts will come from streamlining operations and cutting costs so it can focus on its digital business. Online sales rose by a double-digit percentage during the holidays.
“Macy’s announced it would close 15% of its retail stores last year – and it wasn’t the only one,” said Brent Franson, CEO of customer data insights firm Euclid Analytics. “Walmart, JC Penney, Kmart, Sears and Kohl’s also made similar calls, and after a disappointing holiday season, we are now seeing those announcements hold true. Of course, Amazon’s playing a catalyzing role in these decisions, at least in part. But it’s also that retailers aren’t capitalizing enough on the advantage they have with physical space.”
Identical to Macy’s, Kohl’s reported its same-store sales decreased 2.1% in November and December combined. Various reports say Kohl’s was among the many department stores closing physical locations. Its total holiday sales decreased 2.7%.
“Sales were volatile throughout the holiday season,” said Kohl’s chairman, president and CEO Kevin Mansell on its earnings call. “Strong sales on Black Friday and during the week before Christmas were offset by softness in early November and December.”
At the bottom of all this is the double whammy of a continued slow economic recovery and a massive shift in consumer behavior toward ecommerce. Retail chains like Macy’s, Kohl’s and Walmart have shifted gears to an omnichannel approach, investing millions in recent years to turn stores into mini-distribution centers, fulfilling online orders and enabling the convenience of store pickup and even same-day delivery. Yet despite all of this, ecommerce companies – particularly Amazon, which had a blowout holiday season – continue to gain ground.
“Two out of three shoppers, our research shows, would prefer to kick the tires in person, to see, touch and hold a product before they buy,” said Franson. “But let’s face it. Amazon and other online retailers make a pretty compelling play in terms of personalization and convenience. To win, physical retailers must make it fun and valuable for shoppers to come in person. Unless they make more effective use of their space, 2017 will definitely include more store closures.”
Daniela Forte is Multichannel Merchant’s Content Manager