Business

In The US, More Retail Stores Opening Than Closing In 2017

While net retail stores are opening, fashion & clothing stores are closing

You read the headline right, there are more retail stores opening this year than there are stores closing in the US. You may say, but when I walk down almost any shopping street, I see so many vacancies where there were previously tenants. So how can there be more openings than closings?

A new report out by IHL Group answers that question. The kind of store that's opening now is different. If you look at the chart below, you'll see that the most significant closings are due primarily to the Radio Shack bankruptcy and the closure of a lot of fashion stores. The fashion-related vacancies you're seeing are dominating the list of store closures. You could blame technology for that, but that wouldn't be entirely fair. It's more fair to say that technology accelerated the decline of retailers who have not been in touch with what their consumers wanted as much as their competitors. Technology helps consumers see more of what's available and that makes the comparison between brands so much more stark and apparent.

Major Store Closings in 2017

The list of stores opening this year is dominated by discount and convenience stores. The data highlight changing lifestyles and tastes. Fashion is less important in physical retail stores. It's being shopped for more and more online and it's becoming less of a focus for younger consumers who are more willing to spend money on experiences than on fashion products. What's the net difference in stores in total? The chart below tells the story. The discounters and convenience store openings are opening in a big way and the fashion retailers are closing almost as fast.

Net Store Openings

The reason why you see so many vacancies even though more stores are opening than closing is that the footprint and locations of the stores being closed aren't suitable for the stores being opened. The old stores' formats can't be transformed and their locations don't work for the new stores that are opening. Hence, more vacancies for you to see on major shopping streets.

Restaurants

Of all the experiences that consumers are starting to prefer over purchases of things, food is always at the top of list. It's one of the few things that applies to everyone so the market for restaurants is enormous. Ergo, any look at retail locations opening and closing should also be looking at what restaurant doors are opening and closing too. The big driver of these numbers according to analysts is convenience. Greg Buzek, President of IHL Group that wrote the report, says there are a few reasons for what looks like a disparity in the trends that the numbers reflect:

1. Overexpansion

2. Shrinking middle class

3. Newness

The Takeaway

Consumers haven't gone into hiding and they're not spending less. They're spending more and there are more new stores, but tastes have changed. One of the most important things about these changes is that they are happening much faster than ever before.