For A Growing Number Of Retailers, Small Is The New Black
It’s hardly news that the retail industry is going through significant contraction of selling space as an uptick in bankruptcies and outright liquidations forces hundreds of locations to close en masse. In addition, dozens of struggling retailers continue to shutter outlets hoping to improve profitability or avoid a similar fate. In fact, there is a pretty good chance that the number of store closings this year will exceed last year’s record pace. While there are plenty of new store openings, the net downsizing of retail space in certain categories is clearly significant (for a deeper dive I recommend this excellent report by Coresight Research). Another factor that is starting to affect vacancy rates is that some brands are “right-sizing” their prototypical store, in what I affectionately label the “Honey, I shrunk the store” phenomenon. Some of this is a sure sign that the retailer has run out of ideas for the space it has and is hoping to shrink to prosperity. Good luck with that. Others are wisely optimizing their footprints to address the rise of e-commerce and other fundamental changes in shopping behavior. I fully expect the large scale thinning of the herd to continue apace through (at least) next year, while the evolution of store models will take multiple years to play out. Read more at Forbes.
