The first quarter of 2016 has been marked by the great shrinking retail store chain.
A rash of local and national store closings have made headlines in the first three months of the year, and retail industry analysts contend that large retail chains are shedding stores and tightening budget belts amid an environment of increasing online shopping by consumers.
Area store cutbacks include last week’s shuttering of Macy’s in Sacramento’s Country Club Plaza and the upcoming closures of Kmart at 8501 Auburn Blvd. in Citrus Heights, Forever 21 in Yuba City and Kohl’s at 11051 Olson Drive in Rancho Cordova.
The litany of big-name store closures includes Sports Authority, which earlier this month declared bankruptcy and said it planned to close 140 stores, or about a third of its total.
Sports Authority’s Chapter 11 filing followed a review of operations, which noted a continued increase in online shopping and a corresponding conclusion that it could reduce the number of brick-and-mortar stores it operates.
“We are taking this action so that we can continue to adapt our business to meet the changing dynamics in the retail industry,” said Michael Foss, Sports Authority’s CEO.
Also this month, Tailored Brands Inc., the parent company of Men’s Wearhouse and Jos. A. Bank, said it is closing 250 stores amid disappointing sales numbers.
Other major retailers trimming stores in 2016 include Walmart and The Gap.
All this comes on the heels of aggressive store closings in 2015, when chains such as J.C. Penney, Radio Shack and Target closed hundreds of retail outlets.
I don’t think there’s any doubt that the retail landscape is changing.
Peter Schaub, a New York-based marketing and branding expert
“Some of these chains were overextended to be sure, and the first quarter is usually the time when big-box chains make decisions on store closures … after they’ve crunched the previous year’s numbers and added up the holiday season sales,” said Peter Schaub, a New York-based marketing and branding expert. “But beyond that, I don’t think there’s any doubt that the retail landscape is changing.
“Retailers are upping their Internet game and pulling back brick-and-mortar (stores) … especially the stores that are not performing up to snuff.”
Schaub and other analysts are quick to note that stores are closing, even as Americans are spending more.
For example, the National Retail Federation projected that Easter spending nationwide will top out Sunday at $17.3 billion, which would be the highest total in 13 years. The online piece of that pie will be sizable.
NRF said that 21.4 percent of Easter shoppers will have made their purchases online, up from 18.8 percent in 2015. Among smartphone owners, NRF said 22.8 percent researched Easter products on their devices, and 14.9 percent will have used their phones to make a purchase.
$17.3 billionProjected Easter spending nationwide this year, according to National Retail Federation
Smartphones are playing an increasingly important role in year-round consumer shopping.
According to data compiled by Shop.org (a division of NRF), Forrester Research Inc. and Bizrate Insights, smartphones are surpassing tablets as the device of choice generating online sales and traffic.
Retailers surveyed for the recently released report said smartphone sales accounted for 17 percent of their total online sales in 2015, just ahead of 14 percent generated by tablets. Retailers said sales from smartphone devices grew 53 percent between 2014 and 2015, while sales from tablet devices grew 32 percent.
“Retailers are now recognizing that their customers may not need a bigger, more expansive shopping experience on mobile platforms. They need a consistent, relevant and user-friendly experience that will shape their online and in-store shopping behaviors,” said NRF Senior Vice President and Shop.org Executive Director Vicki Cantrell.
“For today’s consumer, this is all just a part of modern-day shopping; though for retailers, it’s a constant balance of where and how much to invest into the mobile experience and infrastructure,” Cantrell said.
Schaub said the spate of store closings indicates where retailers are heading: “They’re investing more resources in online and pulling back on brick-and-mortar stores.”
A random sampling of Sacramento-area shoppers found numerous instances of increased online shopping, even among those browsing brick-and-mortar stores last week.
“I still like to shop in the stores, see everything close-up, but I have done some shopping online,” said Pamela Case, a 44-year-old mother of two from Sacramento. “I shopped for (gifts) online last Christmas for the first time ever. My older daughter helped me do it.
“It’s not the same as seeing and touching the merchandise, but it’s great if you need something specific in a hurry.”
We used to go to the mall together … Now, we compare what we bought online.
Angie Smith, Placer County resident
At Westfield Galleria at Roseville, 37-year-old south Placer County resident Angie Smith said she made her first online purchase just two years ago, “but now, I’d guess that I do about half of my shopping online … maybe a little more than half at Christmas.”
Smith added: “I have several friends who shop online regularly, and I know they weren’t doing that just a couple years ago. We used to go to the mall together, but that’s not as regular as it used to be. … Now, we compare what we bought online.”
At the Roseville mall, 51-year-old Granite Bay resident Samantha Smart said she was “kind of sad about the changes. I always liked going to the stores with my mom and even my grandma, especially during the holidays, and that’s kind of going away.” Smart conceded, however, that she now shops online: “I’ve been doing it regularly for years now. It’s just easier to do birthdays and special occasions.”
While store infrastructure is shifting gears and big-box retailers are bolstering their online operations to be more competitive, the conventional retail industry remains a huge force in California, according to the NRF.
The organization says there are nearly 420,000 retail establishments supporting more than 4.7 million jobs in the Golden State, both numbers representing about 11 percent of the national total. The NRF says retail’s $330 billion annual impact represents 16 percent of California’s gross domestic product.