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7000 to 10,000 U.S. retail stores expected to close in 2017

By Kristopher Fraser

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Management

This is no great year for brick-and-mortar stores. In a recent article by Forbes, it has been projected that between 7000 and 10,000 U.S. retail stores will close this year alone. Notable brands, such as Bebe and Payless, have already been victims of this year of discontent. The number of new stores opening this year is expected to be very low.

Vacant retail stores have become all too common, and this has some unpleasant implications. For one, it will make retail real estate less valuable in the future if no one is singing long-term leases. The new approach to real estate vacancies is more brands are doing pop-up shops and short-term lease signings, so they are pretty much in and out.

In March 2017, The New York Times pointed out the rising number of for rent signs around New York City, calling it a sign of the times. New York, which is home to some of the world's priciest shopping districts like Madison Avenue and SoHo, has "seen better days," as they put it. Tenants are now known to last only a few years in places.

Brick-and-mortar stores continue their closures

The other problem facing retailers in this climate is mall culture is dying. Millennials don't hang out at malls nowadays the way they did when they were younger. Young people are now constantly connected via social media, so they don't feel the need to hangout in malls. With declining mall traffic, stores are obviously closing, and the future of malls is still unclear.

Retail landlords, just like retailers, will also have to work to find a way to make retail spaces more engaging and appealing to consumers. Some retailers are opting for making shopping experiences more engaging by having retail stores combined with coffee shops and eating experiences. Millennials still love their food and coffee, so it is a way to get them in stores.

Brick-and-mortar stores also face competition from a major entity: Amazon. As long as people keep buying clothes, shoes and other apparel and accessories online, physical retail stores will have a hard time competing. Amazon is a one-stop shop place for everything, and has brands from fast-fashion to luxury. It has become an Amazon versus everyone else mentality.

Retailers and landlords need to revamp their strategy if they are going to survive in the era of ecommerce, because customers aren't leaving their house to shop like they used to. People still love to shop, it's just a matter of how to get them to go to stores and do it.

Photo: Pexels

Store closures