With some retailers, including Sports Authority and Sports Chalet, closing all of their stores, and others, like Sears Holdings, teetering on the edge of heading into the great strip mall in the sky, 2016 has been a difficult year for bricks-and-mortar retailers.
The damage, however, is not limited to the chains that are closing up shop entirely. A number of others -- including some iconic names -- are getting smaller, closing stores as a way to shrink into, if not profitability, at least lower losses.
It's a tough time for America's shopping centers, with it looking like those temporary pop-up Halloween stores will have their pick of prime locations this year. Blame the Internet in many cases, changing consumer demands in others, bad management in a few, and a combination of all of the above in many cases.
Here's a look at some of the retailers that have either already begun closing locations or plan to do so this year.
Ralph Lauren (RL -0.36%) has cut 8% of its workforce while closing more than 50 stores, according to the company. It also has trimmed its management structure from an average of nine layers down to six. CEO Stefan Larsson, who joined the company from Old Navy, where he led a successful turnaround, also has a longer-range plan to cut the amount of time it takes the brand's clothes to go from idea to stores.
Macy's (M 0.21%) has either already closed or plans to close 100 stores by early 2017. CEO Terry J. Lundgren said when the first 40 closing stores were announced that the moves were needed due to the company's "disappointing 2015 sales and earnings performance." The chain has opened five new Macy's locations in 2016 as well as 50 additional Macy's Backstage off-price stores.
Macy's has been closing underperforming store. Image source: Author.
Barnes & Noble (BKS) may be the only happy news on this list as the bookseller has actually decided to close fewer stores in 2016 than it has in any year since 2000. The chain will shutter only eight locations, down from the 13 it had originally planned to lose this year, Fortune reported. The change comes because while most retailers have seen sales slow at physical stores, Barnes & Noble has actually lost online sales volume while its retail locations have been a relative strength. In 2017 the company plans to try more food service and alcohol sales at some locations.
Sears Holdings (SHLDQ) has struggled with both its namesake brand and its low-price Kmart locations and announced in April that it plans to close unprofitable locations this summer. The company has already begun the process of closing 68 Kmart and 10 Sears stores.
Image source: Author.
"The decision to close stores is a difficult but necessary step as we take aggressive actions to strengthen our company, fund our transformation and restore Sears Holdings to profitability," said CEO Edward S. Lampert in the press release. "We're focusing on our best members, our best categories and our best stores as we work to accelerate our transformation."
Lampert has been clear that going forward the company will focus on stores that are profitable or where the chain sees a path to profitability. The company has steadily shrunk and it has lost billions of dollars, making its long-term survival very much in doubt.
Office Depot (ODP 0.21%) entered 2016 expecting to no longer exist by the end of the year as it had planned to merge with Staples (SPLS). That deal was nixed by federal regulators and now the chain must find a way forward. Part of its ongoing strategy involves closing stores with the chain planning to close a total of 50 locations in 2016.
Staples has also been steadily shrinking and it closed 73 stores in 2015 with plans to shut down another 50 this year, according to its Q4 earnings release.
Wal-Mart (WMT -0.08%) has been stepping up its digital sales efforts while it has been making strategic decisions to close stores. The company announced in January that it plans to close all of its 102 Wal-Mart Express stores as well as 52 full-size U.S. locations.
"Actively managing our portfolio of assets is essential to maintaining a healthy business," said CEO Doug McMillon in the press release. "Closing stores is never an easy decision, but it is necessary to keep the company strong and positioned for the future. It's important to remember that we'll open well more than 300 stores around the world next year. So we are committed to growing, but we are being disciplined about it."
While Wal-Mart has exited its Express stores, it has been testing new formats including convenience stores. The company has not announced a plan to roll-out smaller stores, but it has opened test stores for the format in Colorado and Alabama.
Gap (GPS 0.83%) has faced some of the same retail headwinds that have plagued Ralph Lauren. That has led the company to a major pullback of some of its international efforts. For example, it pulled the Old Navy brand out of Japan entirely, closing over 50 stores. The company's North American operations have not been hurt as dramatically as some of its international ones, but the retailer did close 14 stores across its Gap, Old Navy, and Banana Republic brands in its fiscal Q1.
In Q2 and Q3, however, Gap actually reversed that trend and opened 12 more stores than it closed year-to-date as of Oct. 29. The company does plan net closures of about 65 company-operated stores, but those should be offset by openings (both company-owned and franchised).
