The Fung Global Retail & Technology team tracks store openings and closures for a select group of US retailers. Based on 2016 and 2017 year-to-date activity and announcements, we believe that:
Store closing activity far exceeds that of store openings, a reflection of the worsening retail environment. There is a significant divide among the outperformers (those who are opening stores) and the underperformers (those who are closing stores—some due to bankruptcies and others to stem losses).
Retailers that are expanding their store footprint are: value concepts such as fast fashion, discount and off-price, and the beauty and sportswear (athleisure) specialty retailers.
Retailers that are pulling back their store fleets include department stores and specialty retailers with significant exposure to shopping malls. Both are under tremendous pressure due to slower foot traffic and competition from e-commerce—many are closing stores and consolidating their physical presence, while others end up seeking bankruptcy protection.
Value-driven retail concepts such as discount and fast fashion have been aggressive in expanding their store footprint, despite the difficult retail environment. Categories such as beauty and athleisure are outperforming the market, which is evident in their footprint expansion.
The majority of retailers that have been closing stores fall within the department store and specialty retail category. Primary reasons include: 1) dwindling mall traffic; 2) reconfiguration of store networks as retailers shift online; 3) cutting losses from unprofitable stores; and 4) reallocation of resources to profitable stores and digital initiatives.