Brick & Mortar Meltdown Hits These Stores the Most
by Wolf Richter, Wolf Street:
They’re the primary stores at malls.
It happens category by category as commerce shifts bit-by-bit to the Internet: Music stores and video stores got wiped out first, then came bookstores. Shops that are able to offer something the Internet does not offer can thrive, but the overall brick-and-mortar bookstore category is a mere shadow of its former self. Department stores got hit hard starting in 2001. Over the past few years, shoe stores got hit, when 15 years ago everyone said that no one would ever buy shoes online. Sporting goods stores are under fire. Small toy stores got mostly wiped out by big toy stores, such as Toys “R” Us, and by Walmart, Target, and other large retailers, But now the Internet is taking out the big toy stores…
Toys “R” Us, which filed for bankruptcy protection last September, had, not unexpectedly, a terrible holiday selling season. The holiday season would have been key for its survival in restructured form, and so it’s spiraling into oblivion.
It already obtained court approval earlier in February to close 182 stores in the US and shed 4,500 workers along with them. Now it plans to close another 200 stores in the US and lay off more people, the Wall Street Journalreported last night, based on its sources. After the new round of store closings, the retailer will have slashed its footprint in the US by about half since the bankruptcy filing. Part of the blame goes to its inability – overburdened by debt as it was – to build a vibrant online presence.
Nevertheless, people still say that e-commerce is only a small-ish part of overall retail, and that it’s therefore really no big deal. In Q4, the e-commerce share of retail was 9.1%, though up from 8.2% a year ago. But e-commerce sales in the fourth quarter soared nearly 17% from a year ago – the largest jump since Q1 2012 – to a new record of $119 billion.
But this surge in e-commerce is leaving the biggest retail categories largely untouched for now, though this is likely to change. They include auto dealers, gasoline stations, and grocery stores. These three categories alone, at $620 billion in Q4, accounted for 51% of retail sales. These are among the sectors that are still “online resistant.”
Among the remaining 49% ($575 billion in Q4), some categories of retailers are holding on, but others have been getting crushed, and the list of those getting crushed is growing.
So I took a look at the specific categories that are being mauled the most by e-commerce, based on the categories used in the Commerce Department’s retail sales reports. On one side is E-commerce; on the other side are these categories that have gotten hit the hardest so far:
- Sporting goods, book, hobby, toy, game, and music stores
- Electronics and appliance stores
- Department stores
- Shoe stores
- Clothing, & clothing accessory stores
Together they accounted for or about 28% of the “under attack” segment. Their combined sales of $159 billion in Q4 2017 were just above where they’d been in Q4 2005 despite 11% population growth over the 12-year period and 30% in price increases as measured by the Consumer Price Index:
Read More @ WolfStreet.com
Source: https://www.sgtreport.com/articles/2018/2/23/brick-mortar-meltdown-hits-these-stores-the-most
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