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A Toys “R” Us store under the effects of a liquidation sale in Auburn, Massachusetts as seen on June 24, 2018. That store remained closed beginning on June 26, 2018. The company filed for Chapter 11 bankruptcy reorganization in 2017, and converted it to a Chapter 7 bankruptcy liquidation in March 2018. The stores closed permanently on June 30, 2018.

A Sports Authority store in Flemington, New Jersey, as seen on May 28, 2016. This location also has signs announcing the store's impending closure. The company went bankrupt in 2016.

Store closing sale at the Sears in the Dover Mall in Dover, Delaware in May 2018. The store closed in August 2018.

American Apparel had not made a profit since 2009,^[1] and filed for Chapter 11 bankruptcy twice, once in 2015 and another in 2016.^[2][3][4]

The retail apocalypse is the closing of a large number of North American brick-and-mortar retail stores, especially those of large chains, starting in 2010 and continuing through 2018.^[5][6] Over 12,000 physical stores have been closed, due to factors such as over-expansion of malls, rising rents, bankruptcies of leveraged buyouts, low quarterly profits outside holiday binge spending, delayed effects of the Great Recession,^[6] and changes in spending habits. North American consumers have shifted their purchasing habits due to various factors, including experience-spending versus material goods and homes, casual fashion in relaxed dress codes, as well as the rise of e-commerce,^[7] mostly in the form of competition from juggernaut companies such as Amazon.com and Walmart.

Major department stores such as J. C. Penney, Macy’s, Sears, and Kmart have announced hundreds of store closures, and well-known apparel brands such as J. Crew and Ralph Lauren are unprofitable.^[8] Of the 1,200 shopping malls across the US, 50% are expected to close by 2023.^[9] More than 12,000 stores are expected to close in 2018, and only 4,000 of them have been planned by several retailers.^[10]
Several retailers such as Toys "R" Us and The Bon-Ton have liquidated and closed all their stores.

Recent research from IHL Group shows a net increase of more than 2,000 store openings by the end of 2018. IHL also found that for every retailer closing stores, two are adding stores, and two-thirds of the store closings are tied to just 16 stores.^[11][12]

The retail apocalypse phenomenon is related to the middle-class squeeze, in which consumers experience a decrease in income while costs increase for education, healthcare, and housing. Bloomberg stated that the cause of the retail apocalypse "isn’t as simple as Amazon.com Inc. taking market share or twenty-somethings spending more on experiences than things. The root cause is that many of these long-standing chains are overloaded with debt—often from leveraged buyouts led by private equity firms."^[13]Forbes has said the media coverage is exaggerated, and the sector is simply evolving.^[14]
The most productive retailers in the United States during the retail apocalypse are Walmart and Target, some regional department store chains (e.g. Belk, Boscov's, Boyd's, Dillard's, and Von Maur), the low-cost "fast-fashion" brands (e.g. Zara, Uniqlo, Cotton On, Forever 21, and H&M), off-price department stores (Ross Stores and DD's Discounts, Marshalls and Burlington) and dollar stores (e.g. Dollar General and Family Dollar).^[15]
At least one private equity firm, Sycamore Partners, has made money buying assets from brick-and-mortar chains during the retail apocalypse.^[16]Pop-up retail, including seasonal retailers such as Spirit Halloween, have become a common factor during the retail apocalypse operating temporarily in vacant spots after companies go out of business, or store closings, as a result of it.

Accompanying the store closings were, in many cases, significant declines in the stock prices of retail companies.^[17]

History

Since at least 2010, various economic factors have resulted in the closing of a large number of North American retailers, particularly in the department store industry. For instance, Sears Holdings, which had 4,061 Kmart and Sears stores in the United States and Canada at the company's peak on October 29, 2011, including Orchard Supply Hardware locations that were spun off in 2012, those now spun off to Sears Hometown and Outlet Stores on October 11, 2012 and a de-consolidation of Sears Canada on October 16, 2014, was down to 866 in the United States as of August 13, 2018, with more closures scheduled.^[18] Kmart operated 2,171 stores at its peak in 2000,^[19] a number that has since dwindled to 360 with further closures planned.^[20][21]

The term "retail apocalypse" began gaining widespread usage in 2017 following multiple announcements from many major retailers of plans to either discontinue or greatly scale back a retail presence, including companies such as H.H. Gregg, Family Christian Stores and The Limited all going out of business entirely.^[22]The Atlantic describes the phenomenon as "The Great Retail Apocalypse of 2017," reporting nine retail bankruptcies and several apparel companies having their stock hit new lows, including that of Lululemon, Urban Outfitters, American Eagle.^[6]Credit Suisse, a major global financial services company, predicted that 25% of U.S. malls remaining in 2017 could close by 2022.^[23]

The retail apocalypse has had a domino effect on suppliers; Hasbro, for example, cited the loss of the Toys R Us chain as a major cause for lost revenue and layoffs the company imposed in October 2018.^[24]

In the second half of 2017 and throughout 2018, the media and analyst community began recognizing retail as an industry in transition, rather than demise. Bloomberg said in May 2018 that ‘the death of retail has been greatly exaggerated’ and Telsey Advisory Group stated that ‘retail is not dead’ in August 2018 following news that the SPDR S&P Retail ETF had risen 13% year to date to a record high, more than double the return of the S&P 500 Index.^[25][26]

In June 2018, SeekingAlpha wrote that 90 percent of purchases are still made in stores, and except for Amazon, the top ten retailers are brick-and mortar operators: in order, they are Walmart, Kroger, Costco, Home Depot, CVS, Walgreens, Amazon.com, Target, Lowe’s and Albertsons.^[27] Forbes wrote in July 2018 that changing consumer behavior has forced the traditional brick-and-mortar retailers and shopping-center developers to reinvent and answer the new needs of consumers.^[28]

Numerous pureplay online retailers including Warby Parker, Untuckit, Casper, Away, Wayfair and TheRealReal have announced plans to open their first physical stores and expand their existing footprints in 2018 and beyond.^[29][30][31]

JLL reports that digitally native brands will open 850 stores in the next five years. These retailers are finding that opening a physical store has a halo effect on web traffic: A study from the International Council of Shopping Centers shows that a new store increases traffic to that retailer’s website by an average of 37 percent and drives up share of web traffic within that market by 27 percent.^[32][33][34]

The National Retail Federation forecasted that 2018 retail sales would climb at least 4.5 percent over 2017, pointing to higher wages, gains in disposable income, a strong job market and record-high household net worth for very robust growth in the nation's consumer-driven economy.^[35]

Affected retailers

Sears Holdings filed for bankruptcy protection in October 2018 and plans to close about 142 of its 700 stores by the end of 2018.
Toys "R" Us filed for bankruptcy,^[36] and closed all its US stores in June 2018.^[37][38]

Unaffected retailers

This section may primarily relate to a different subject, or place undue weight on a particular aspect rather than the subject as a whole. Please help by spinning off or relocating any relevant information, and removing excessive detail that may be against Wikipedia's inclusion policy. (October 2018)

The retailers below are ones that are defying the retail apocalypse by opening stores, remodeling stores, and/or being able to surivive changing trends.

Ulta Beauty is opening 100 stores in 2018

As of 2018, Build-A-Bear Workshop had expanded its physical footprint by 12% and had been profitable for four straight years^[39]

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  Aldi is planning to open 180 new stores by the end of 2018 and grow to 2,500 stores by 2022.^[40]
  


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  At Home opened its 150th store in 2018 and plans to open even more stores.^[41]
  


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  Boscov's, after emerging from bankruptcy in 2009,^[42] saw record sales of $1.2 billion in 2017 and continues to open new stores.^[43]
  


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  Build-A-Bear Workshop remains as the mall-based toy retailer surviving the retail apocalypse in 2018, after Toys 'R' Us announced plans to close all 735 of its U.S. stores in March 2018. ^[39]
  


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  Costco Wholesale opened 8 new stores in the first half of fiscal year 2018 and will open 18 to 20 new stores during the second half of 2018.^[44]
  


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  Dick's Sporting Goods will open 20 stores in 2018, though this is a slowdown compared to before. Ed Stack mentioned that they would open more locations once market rents drop.^[40]
  


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  Dollar General will open 1,846 new stores in 2018, remodel 1,568 stores, and relocate 219 stores.^[41]
  


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  Dollar Tree, also operating Family Dollar, opened 137 stores in fiscal year 2017. The company opened 603 new stores overall in the year of 2017.^[45]
  


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  Duluth Trading Company plans to expand to 100 locations by 2023, mainly opening 15 stores in 2018.^[46]
  


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  Fabletics plans to open 50 to 100 stores in the next five years.^{[citation needed]}
  


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  Five Below will open 125 stores in 2018.^[45]
  


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  Gap Inc., despite closing 200 locations by 2020, is opening 270 stores under the Old Navy and Athleta brands.^[40]
  


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  Hobby Lobby will open 60 new locations in 2018.^[45]
  


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  Home Depot routinely reports a profit, and new stores are being planned^[when?] on opening.


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  Ollie's Bargain Outlet will open 36 to 38 new stores in 2018.^[45]
  


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  Ross Stores will open 75 Ross stores and 25 DD's Discounts stores in 2018.^[40]
  


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  Target is planning to open 35 small format stores in 2018 and remodel more than 300 existing stores.^[41]
  


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  Tillys is opening new stores^[when?] across the US.


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  TJX Companies, owner of T.J. Maxx, HomeGoods, Marshalls, etc. opened 258 by fiscal year 2018 for a total of 4,070 stores as of the fiscal year.^[45]
  


• In 2018, Party City announced that they will be opening their first Toy City stores by September 2018, filling the void left by Toys "R" Us.^[47][48]
  


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  Tractor Supply Company opened 101 new stores in 2017, with plans to open 80 stores during 2018.^[49]
  


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  Uniqlo is opening new stores.^{[citation needed]}
  


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  UNTUCKit plans to open 25 new stores in 2018, and grow to 100 stores by 2022.^[50]
  


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  Ulta Beauty will open around 100 new stores and remodel 17 existing stores in fiscal year 2018.^[41]
  


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  Walmart opened 89 stores in 2017 and will open more in 2018. No exact target has been disclosed as of April 2018.^[44]
  


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  Warby Parker, an eyeglass retailer, will open 40 stores by the end of 2018.^[41]
  


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  Z Gallerie is opening new stores across the US.^{[citation needed]}
  

Factors

The main factor cited in the closing of retail stores in the retail apocalypse is the shift in consumer habits towards online shopping.^[51] Holiday sales for e-commerce were reported as increasing by 11% for 2016 compared with 2015 by Adobe Digital Insights, with Slice Intelligence reporting an even more generous 20% increase. Comparatively, brick-and-mortar stores saw an overall increase of only 1.6%, with physical department stores experiencing a 4.8% decline.^[52] Another factor is an over-supply of malls,^[53] as the growth rate of malls between 1970 and 2015 was over twice the growth rate of the population. In 2004, Malcolm Gladwell wrote that investment in malls was artificially accelerated when the U.S. Congress introduced accelerated depreciation into the tax code in 1954.^[54] Despite the construction of new malls, mall visits declined by 50% between 2010-2013 with further declines reported in each successive year.^[55] A third major reported factor is the "restaurant renaissance," a shift in consumer spending habits for their disposable cash from material purchases such as clothing towards dining out and travel.^[6] Another cited factor is the "death of the American middle class," resulting in large-scale closures of retailers such as Macy's and Sears, which traditionally relied on spending from this market segment.^[56] The final factor in poor brick-and-mortar sales performance is a combination of poor retail management coupled with an overcritical eye towards quarterly dividends: a lack of accurate inventory control creates both underperforming and out-of-stock merchandise, causing a poor shopping experience for customers in order to optimize short-term balance sheets,^[57] the latter of which also influences the desire to understaff retail stores in order to keep claimed profits high.^[58] Furthermore several private-equity forms have bought many retailers and loaded them with extraordinary amounts of debt, which hinders the profitable operation of retail chains^[59][60].

See also

• Dead mall


• Experience economy


• Generation Z


• Economic history of the United States


• Pop-up shop

References

External links

• Brian Sozzi, Coach CEO Perfectly Explains What Must Be Done to Survive Retail Apocalypse thestreet.com September 8, 2017


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  The Death Knell for the Bricks-and-Mortar Store? Not Yet MATTHEW SCHNEIER, New York Times, November 13, 2017


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  What It's Like to Work in the Last Big Store in a Dying Mall Washington Post/Newser, Kate Seamons, January 2, 2018

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  Dead Mall Series on YouTube