JLL's retail store closure summary - March 2017

Retail store closure summary

3-28-17

JLL Retail Research

© 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 2

The big picture

Larger stores are facing closures in the coming year

© 2017 Jones Lang LaSalle IP, Inc. All rights reserved.

3

Source: ICSC, JLL

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

0

20

40

60

80

100

120

2010 2011 2012 2013 2014 2015 2016

Mill

ion

s

SF to be closed (L)

# of stores to be closed (R)

• While the number of store

closure announcements is

lower than during the

recession, the amount of

retail space being closed is

higher.

• Department stores like JC

Penney, Macy’s and Sears

have large footprints.

Why so many closures?


• Consumers tastes are

changing, especially as

millennials increase their

prominence and buying power.

• E-commerce penetration is a

reality and it’s growing

(although not as much as some

people fear).

• Consumers want experiences,

convenience and value. Stores

that fulfill those functions well

stay open. Those that don’t will

close.

Does e-commerce tell the whole story?


Nope. Here’s why:

• While e-commerce is growing at a

steady pace, the fact is most

purchases still take place within a

store.

• What's more, 1.7 percent of sales

occur on bricks-and-mortar

retailers’ websites, and some online

orders even take place inside a

store.

• Even more important: online

retailers are opening physical

locations, proving the importance of

bricks-and-mortar.

ICSC Research Analysis of U.S. Census

Bureau’s Quarterly E-Commerce Report

Pure-Play E-Commerce

3.3%

In-Store E-Commerce

0.9%

Non-Merchandise

Receipts

0.6%

Omni-Channel E-

Commerce

1.7%

In-Store sales

93.5%

What can we expect in the future?


The store function is shifting from

simple transactions to full-on

experiences. Here is what stores will

increasingly look like:

• Fluid transactions – no waiting at

cash register.

• Showroom/museum feel with

curated products.

• Emphasis on connecting with

consumers over selling.

• Experiential and interactive

environments that entertain

consumers.


So, who’s closing?

Apparel and shoe retailers are closing the most stores


958

525

370

284

241

132

131

114

70

59

48

41

36

6

3

Apparel

Shoe stores

Office supply

Restaurants

Books & Music

Discount dept. stores

Sporting goods

Department stores

Drug stores

Dollar stores

Home Furnishings

Grocery stores

Specialty stores

Electronics stores

Wholesale clubs Announced closures

Source: PNC,JLL

• Changing demographics, shifting

consumer tastes in favor of

discounters and fast fashion and some

sales loss to online sellers have all

helped to close some apparel stores.

• Bankrupt retailers like The Limited,

Wet Seal, BCBG Max Azria and

American Apparel are leading the

store closure count.

• Office supply sales are shifting more

and more online.

Retailers closing 50 or more stores


500

300

250

240

171

130

120

110

108

95

88

70

70

68

64

63

60

59

55

50

50

Payless Shoe Source

Office Depot

The Limited

Family Christian

Wet Seal

JC Penney

BCBG Max Azria

American Apparel

Kmart

Ruby Tuesday

hhgregg

CVS Health

Staples

MC Sports

Macy's

Kenneth Cole

Abercrombie & Fitch

Golfsmith

Noodles & Company

Chico's

Guess Announced closures

Source: PNC,JLL

Over half of announced closures* due to bankruptcy


Source: PNC,JLL

*JLL-tracked closures

51%49% Announced closures

Filing for bankruptcy Not filing

Retailers who recently announced bankruptcies


Source: PNC,JLL

4 36 59 68 88 110 120171

240 250

500

GanderMountain

Marbles:The

BrainStore

Golfsmith MCSports

hhgregg AmericanApparel

BCBGMaxAzria

Wet Seal FamilyChristian

TheLimited

PaylessShoe

Source

Announced closures

Apparel and sporting goods are seeing the most bankruptcies


Source: JLL

Apparel4

Sporting goods3

Books & Music

1

Specialty stores

1

Shoe stores1

Electronics stores

1

# of retailers filing for bankruptcy

Apparel and shoe stores closing the most locations because of bankruptcy


Source: PNC, JLL

651

500

240

13188

36

Apparel Shoe stores Books & Music Sporting goods Electronics stores Specialty stores

Announced closures

Department stores will close nearly 350 locations


Source: PNC, JLL

• Discount department stores

like JC Penney and Kmart

are closing the most

locations.JC

Penney130

Kmart108

Macy's64

Sears42

Announced closures

Purchases of office supplies move online


Office Depot

300

Staples70

Announced closures

• Office supplies are highly

commoditized products, making it

easy for consumers to purchase

online.

• As a result, office supply retailers

are shrinking their store count.

• Office Depot’s acquisition of Office

Max means the retailer must also

close redundant locations.

Source: PNC, JLL

Sporting goods retailers are closing 159 stores


MC Sports

68

Golfsmith59

Gander Mountain

32

Announced closures

Source: PNC, JLL

• There are three major bankruptcies

happening among sporting goods

retailers, resulting in nearly 160

store closures.

• In comparison, Dick’s Sporting

Goods is a strong performer and is

steadily expanding its footprint,

planning 43 new stores in the next

fiscal year.


Yes, some retailers

are expanding!

Dollar stores continue their aggressive expansion


1650

265

167

155

125

108

80

52

48

35

29

25

5

1

Dollar stores

Auto parts

Apparel

Discount department…

Beauty & cosmetics

Specialty stores

Home furnishings

Sporting goods

Grocery stores

Department stores

Wholesale clubs

Pet supply

Electronics

Convenience stores Announced openings

Source: PNC,JLL

Retailers openings 25 or more stores


1000

650

190

100

100

90

80

75

73

65

50

43

32

30

29

2

2

Dollar General

Dollar Tree

O'Reilly Automotive

Tractor Supply

Ulta

Ross stores

HomeGoods

Advance Auto Parts

Carter's/Oshkosh

TJ Maxx/Marshalls

Aerie

Dick's Sporting Goods

Sprouts

Target

Costco

Bath & Body Works

Petsense Announced openings

Source: PNC,JLL

© 2017 Jones Lang LaSalle IP, Inc. All rights reserved. The information contained in this document is proprietary to JLL and shall be used solely for the purposes of evaluating this proposal. All such documentation and information remains the property of JLL and shall be kept

confidential. Reproduction of any part of this document is authorized only to the extent necessary for its evaluation. It is not to be shown to any third party without the prior written authorization of JLL. All information contained herein is from sources deemed reliable; however,

no representation or warranty is made as to the accuracy thereof.

Jllretail.com

Contacts

James D. Cook

Americas Director of Research, Retail

+1 317 810 7191

+1 602 363 6691

[email protected]

Keisha Virtue

Senior Research Analyst, Retail

+954 990 0844

+954 449 3182

[email protected]

mailto:[email protected]

mailto:[email protected]

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