Tags: green street advisors | department stores | sears | macys

Green Street Advisors: Department Stores' Closing Good for Productivity

Image: Green Street Advisors: Department Stores' Closing Good for Productivity
A Kmart department store is seen in Springfield, Virginia, October 23, 2014. (Saul Loeb/AFP/Getty Images)

By    |   Tuesday, 26 Apr 2016 12:47 PM

Research firm Green Street Advisors said in a new report that department stores across the country need to shutter hundreds of locations to regain their past productivity.

Green Street estimated that about 800 stores, making up about a fifth of mall anchor space, would need to be closed to return the market to 2006 levels of sales per square foot, The Wall Street Journal reported.

Discount stores and online retailers have sapped business from department stores, resulting in hundreds of closings in recent years of Sears, Macy’s, J.C. Penney and other department stores.

To return to 2006 productivity levels, Sears in particular would need to close 300 stores, or 43 percent of its existing stores, while J.C. Penney would need to shutter 320 stores, or 31 percent of its existing stores, according to the report.

Last week, Sears Holdings Co. announced plans to close 78 stores, including 68 Kmarts, this summer. In February, Kohl’s announced plans to close 18 stores, while a month earlier Macy’s announced plans to close 40 stores.

“If department stores were to move forward and aggressively streamline their physical presence it could result in several hundred malls no longer being relevant retail destinations,” DJ Busch, a senior Green Street analyst, told The Wall Street Journal.

“One could almost feel sorry for the teenagers of tomorrow. They won't have malls to hang out in,” Matt Miller wrote for Esquire.

Before the recession, department stores were expanding rapidly, Fortune reported. But the economic crisis drove many customers to discount stores and online retailers.

J.C. Penney CEO Marvin Ellison told Fortune that cutting stores is complicated by the fact that many stores serve as distribution centers and pick-up spots for online orders.

Layoffs in the retail sector are on track to be the highest since 2010, MarketWatch reported, citing Credit Suisse analysts. More than 24,000 retail-sector job cuts have been announced so far this year, and the year could end with more than 37,000 layoffs.

“Most of the layoffs announced year to date are at the store associate level, as a result of retailers closing unproductive stores to ‘right size’ their brick-and-mortar footprint, or as a result of retailers attempting to reduce the number of employees per store,” MarketWatch quoted Credit Suisse as reporting. “These layoffs are clearly an attempt to deal with the decline in brick-and-mortar productivity, as brick-and-mortar sales are lost to e-commerce while store expenses grow due to increasing wages.”

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Research firm Green Street Advisors said in a new report that department stores across the country need to shutter hundreds of locations to regain their past productivity.
green street advisors, department stores, sears, macys
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2016-47-26
Tuesday, 26 Apr 2016 12:47 PM
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