As retailers crawl out of the worst recession in decades, many realize that they overbuilt and have too many stores. Declining sales have forced several chains to pare down their number of outlets and, in some cases, file for bankruptcy.
U.S. chains announced roughly 3,000 store closings in 2011, down from the 5,000-plus announced in 2010, according to Retail Traffic, a trade publication that tracks retail real-estate trends. One result is that the nation’s malls and shopping centers are reporting near-record vacancy rates as anchor tenants retrench.
Sears, the nation’s biggest seller of household appliances, is struggling. Department store chains like Macy’s and J.C. Penney are treading water, while apparel retailers like Gap and Talbots have fallen victim to changing fashion preferences.
And while the job market is improving and consumer credit is easier to get, a renewed spike in store closings can’t be ruled out in 2012, according to Retail Traffic. Especially vulnerable are consumer electronics chains, which are under intense price pressure from Wal-Mart Stores and don’t have many hot new products coming to market. Meantime, store openings will likely come from discounters like Family Dollar Stores, Dollar Tree and Wal-Mart.
“The ‘extreme-value guys’ are where the growth is,” says Howard Davidowitz, chairman of retail consultant Davidowitz & Associates.