An estimated 7,795 U.S. retail store closures were announced in 2017, according to a new research note from UBS, setting a new record.
Store closures across the U.S.
Previously, the biggest slew of U.S. retail closures came in 2008 with 6,163 locations shuttering, according to a 2017 report by Credit Suisse. That report added that 5,077 stores closed in 2015 and 2,056 stores in 2016.
Looking at six traditional retailers who closed stores in 2017 — JCPenney (JCP), KMart (SHLD), Macy’s (M), Payless, RadioShack, and Sears (SHLD) — Yahoo Finance put together a map showing the wave of about 2,750 closures across the U.S.
Hope for 2018
Despite the seismic shift toward e-commerce, all is not lost for traditional retailers.
“With e-commerce sales likely to gain further penetration in the coming years, we think store closures will probably be a prevalent theme in 2018 as well,” UBS wrote. “That said, some signs are emerging that demand for in-store purchases and the supply of physical locations could be reaching an inflection point.”
After shedding surplus stores, the recent passage of U.S. tax reform could help retailers compete online against less established internet companies.
Many e-commerce-only companies are “unprofitable or generate only a small profit at best,” UBS stated. “As such, we believe the tax reform should provide traditional retailers with significant ammunition to invest in price and in other areas of their business so as to gain a competitive edge over their internet competitors. This is sure to be a focus in 2018.”
Furthermore, certain tactics employed by traditional retailers embracing the internet era are working against upstart online competitors.
“Specifically,” UBS analysts wrote, “We’re seeing retailers embrace partnerships with Google and third-party delivery services and leveraging their store footprints to provide incremental services such as buy online, pick up in-store, curbside pickup, and free returns to stores.”