Daily Management Review

US retail stores are leaving offline space


Development of online commerce, which allows sellers to significantly save money, is encouraging companies to close their physical stores. As a result, more than 7 thousand points of sales were closed over the first half of the year in the USA, and by the end of the year this figure could be twice as large as last year.

According to Coresight Research, which monitors the situation with closing and opening of physical stores, 7,426 points of sale were closed in the United States by July 18. This is about a quarter more than in all of 2018. Moreover, in the second quarter, the pace of retailers leaving the streets was the highest in the last nine years.

At the end of 2019, the number of closed stores could reach 12 thousand, according to analysts at Coresight Research. This number is twice as large as that of the last year.

The situation is associated either with bankruptcy of companies, or with the desire of retailers to tighten their belts and reduce costs by going online. The latter is becoming increasingly popular with the American population. Back in February, the US Department of Commerce announced that online sales in the country overtook sales in physical stores in terms of revenue for the first time in history. The list of those who are actively closing physical stores includes Victoria’s Secret, Gap, Fred’s, Charlotte Russe and Charming Charlie. Only the last two companies account for about 800 physical stores, which will definitely be liquidated.

As noted by the Financial Times, the record low level of construction of new commercial buildings in the United States in recent years has significantly pushed up the employment rate of space in shopping centers. According to CBRE, an American commercial broker, it grew in 16 of the last 22 quarters. Nevertheless, this does not mean that the area will be empty everywhere. The amount of vacant space depends on the level of the shopping center itself. According to the consulting company Green Street Advisors, 97% of the premises are occupied in class A ++ shopping centers, and only 67% - in the centers of the lowest class. 

source: ft.com