12 Major Retailers Closing Stores Due to the Amazon Effect

    Brick-and-mortar retailers are increasingly losing foot traffic, and sales to Amazon as consumers increasingly shift to online shopping, either by desktop or mobile device.

    Sears, Macy’s, Kohl’s, J.C. Penney and a dozen of other popular retailers, have lost billions of dollars in market value over the past ten years, mainly because they failed to adapt to a fast-changing retail environment where consumers can easily compare prices and buy things online.

    Image source: Visualcapitalist.com

    Big box retailers forgot about the importance of in-store customer experiences in an omnichannel world. In other words, brick and mortars got too comfortable with what they already had, and it bit them. Over the same 10-year period, Amazon’s market value has grown by 1,934%.

    Big box and department store sales plummeted, as consumers increasingly went online to do their shopping. This year, it is estimated that revenues are equal to just 62% of their totals in 2006.

    Big Box and Department Store Sales ($ Billion) Chart

    In 2006, big box and department stores had revenue of $252 billion. In 2015, the revenue plummeted to $163 billion. Big box and department store sales plummeted, as consumers increasingly went online to do their shopping. In 2017, it is estimated that revenues are equal to just 62% of their totals in 2006.

    Image source: Visualcapitalist.com

    Here are 12 Major Retailers Closing Stores Due to the Amazon Effect

    JC Penny

    To reduce expenses, JC Penney has been steadily closing underperforming stores at the beginning of each year: 33 in 2014, 40 in 2015, and seven in early 2016. In May, the Plano, Texas-based retailer, which has currently more than 1,000 locations nationwide, also announced cost-cutting measures like cutting payroll and eliminating overtime hours for employees. Shares of JC Penney have fallen by more than 25% since March.

    Macy’s

    This mall anchor—known to many by the titular Thanksgiving Day parade that passes through Herald Square in New York—has been consistently shutting down stores over the past year. In August, Macy’s announced that it would shutter 100 stores—following an announcement eight months earlier in which the department store said it would close 36 stores and eliminate 4,500 jobs to boost profitability. Over the past six years, Macy’s has closed more than 90 stores (it currently has more than 675).

    Sears

    In April, Sears Holdings—which owns both Sears and Kmart–announced that it would close 68 Kmarts and 10 Sears locations that were not turning a profit. All the stores are expected to be closed by the end of July. Sears, which is suffering from its largest dip in operating performance since 2006, would have to close 300 existing stores, or more than 40% of its locations, to achieve the productivity it enjoyed a decade ago, CBS News reported.

    American Eagle

    American Eagle Outfitters, which rose to prominence as the outfitter of suburban teenagers, announced in 2014 that it would close 150 of its approximately 1,000 stores over the subsequent three years. Perhaps the efforts are paying off: Share prices of the clothier have remained relatively steady since the beginning of the year, while the stock of other apparel sellers has floundered. American Eagle also said this year that it would roll out a mobile-friendly version of its website, following in the footsteps of retailers like Walmart that are trying to make the online shopping experience more consumer-friendly.

    Aéropostale

    Like teen-clothing competitor American Eagle, Aéropostale is falling on hard times. In May, it filed for Chapter 11 bankruptcy after losing money for 13 consecutive quarters. At the same time, it also announced the closing of 154 of its approximately 800 locations, some of which were set to shut down that same week, and said it might consider shutting down, even more, stores in the months to come. Like American Eagle, both face competition from “fast fashion” chains like H&M, which have pulled ahead by putting new styles into production at a fast pace.

    Sports Authority

    The nation’s largest sports retailer may have been among the hardest hit by the recent retail slump. After filing for bankruptcy in March, Sports Authority said it would close 140 of its 450 locations. But after failing to find a buyer for its remaining stores, it decided to shut them all down. Before you hit Sports Authority’s extensive sale, which began in May and promises more than 70% off merchandise, bear in mind that the best deals aren’t likely to appear until closer to the stores’ close date of August 31, after bargain hunters have already scoured through the prime offerings.

    Office Depot

    To fund the buyout of rival Office Max in 2014, Office Depot promised to close at least 400 stores by the end of 2016, The Street reported. In 2014, it shuttered 168 locations, followed by 181 in 2015. It also plans to close down about 50 U.S. locations this year, bringing it just one store shy of its stated goal. Office Depot may be forced to shut down, even more, stores if Staples’ impending buyout of the office supply chain does not receive regulatory approval.

    The Children’s Place

    The Children’s Place, which reported disappointing earnings in March 2015, upped its planned store closes: from 125 through 2016, to 125 in 2017, the Wall Street Journal reported. In the fourth quarter of 2014 alone, it closed 21 locations. Investors have criticized the children’s apparel chain for its poor merchandising decisions and negative sales figures within individual locations.

    Walgreens

    In April 2015, the largest U.S. pharmacy chain announced that it would close 200 stores as part of an effort to cut costs by $500 million, USA Today reported. But in the future, to seal a $17.2 billion merger with Rite Aid, it might be forced to close as many as 1,000 stores. That’s a significant portion of Walgreens’ more than 8,000 locations in the U.S., but perhaps a worthy sacrifice to join forces with a company with 4,600 stores nationwide.

    Walmart

    In an attempt to consolidate, Walmart announced at the beginning of the year that it would shut down 269 locations around the world, including 154 in the U.S., including all 102 of its small-store “Express” locations. Walmart plans to open up more than 500 stores worldwide this year, but these stores will primarily be Supercenters and Neighborhood Markets in locations deemed more lucrative. Additionally, this week, perhaps in an attempt to take on Amazon head-on, Walmart also announced a free two-day shipping service nationwide.

    Barnes & Noble

    Barnes & Noble is on the upswing, kind of. The brick-and-mortar book store (yes, those do still exist) plans to close just eight stores this year, the fewest number of locations shut down since 2000. In fact, it’s B&N’s physical stores that have been propelling the company’s growth in the past year, while online sales have plunged by double digits. Still, the number of Barnes & Noble locations has decreased from 798 stores in 2008 to 640 as of early this year.

    Finish Line

    Early this year, the Indianapolis-based sports clothier Finish Line said it planned to close 150 of its 617 stores because they were generating just $1 million each in annual sales, or about half the company average. Finish Line hopes the closures will help cut costs and allow the chain to focus on more profitable locations.

    While all of the 12 retailers above have announced store closing, Amazon gained 1,934% in value over the same timeframe, making it one of the most valuable companies in the world. Will retail stores be dead in 2017?

    Here is what Warren Buffett had to say about this. Warren Buffett says that in 10 years, the retail industry will look nothing like it does now.

    “The department store is online now,” the billionaire investor said Saturday at Berkshire Hathaway’s annual meeting in Omaha, Nebraska, as Business Insider’s Bob Bryan reported.

    “I have no illusion that ten years from now will look the same as today, and there will be a few things along the way that surprise us,” he said. “The world has evolved, and it’s going to keep evolving, but the speed is increasing.”

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    • Show Comments (2)

    • dan690

      It’s not Amazon’s fault. These companies failed to keep up with customers wants and needs. Going into some of these store is like going back 50 years in time.

    • Ron8200

      Sears where a banker decided to run a two retail operations. He failed sorry for all their long time employees.
      JCP and Macy’s look to have taken steps to compete I think they will survive.

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