Why are so many major retailers closing locations in 2015?
Short answer: a big shift from selling products to selling experiences
Office Depot, Radio Shack, and Barnes & Noble are a few of the largest U.S. retail chains that have announced store closings and downsizing plans for 2015. In fact, even before the end of 2014, U.S. retail industry companies had already announced store closing and downsizing plans that will be taking place this year (and, what looks like years to come). These numbers are not rumor or speculation but were complied by our Charlotte marketing agency based on corporate documents and company press releases.
The common logic behind the closures is diminishing same-store productivity. Some were the victims of polarizing economics; some were run out of town by the internet; and others were simply waylaid by intense competition, but whatever the root cause, the net effect has been the same – these locations were not deemed to be “productive” by conventional measures like sales per square foot, sales per operating hour and sales per employee, and these dated KPIs are precisely the problem.
While brick & mortar stores are no longer as vital for the distribution of products, they are becoming a lot more important for the distribution of experiences.
The store allows the consumer to engage the brand, its products and its culture in a visceral and emotional way that simply cannot be replicated online.
So as more and more sales happen across mobile, social and online channels, the store’s strategic importance will need to shift as well – to delivering more powerful, relevant experiences that foster love and loyalty.
A partial list U.S. retailers closing, downsizing, or going bankrupt in 2015:
- 1,784 Radio Shack (Chapter 11 bankruptcy)
- 400 Office Depot / Office Max (by 2016)
- 338 Wet Seal
- 300 Deb Shops
- 265 Body Central
- 250 Office Depot (2015)
- 225 Staples (through 2015)
- 223 Barnes & Noble (through 2023)
- 180 Abercrombie & Fitch (by 2015)
- 175 Aeropostale (“over the next several years”)
- 170 Jones Group (by mid-2014 )
- 150 American Eagle Outfitters (through 2017)
- 133 Target, Canada (bankruptcy)
- 127 Jones New York Outlet
- 80 Wolverine World Wide (2015 – Strike Rite & Keds)
- 77 Sears (2015)
- 75 Aeropostale (through January 2015)
- 70 Coach (fiscal 2015)
- 66 Bottom Dollar Food
- 63 Pep Boys (“in the coming years”)
- 55 Staples (2015)
- 54 Golf Galaxy (by 2016)
- 50 Express (through 2015)
- 50 Guess (through 2015)
- 50 Wet Seal
- 40 jcpenney