Everything must go: There's a flood of store closings - KYTX CBS 19 Tyler Longview News Weather Sports

Everything must go: There's a flood of store closings

Posted: Updated:
NEW YORK CNN MONEY (KYTX)- It may be too soon to write brick-and-mortar's obituary, but it's not looking good.

Radio Shack (RSH) announced Monday it will close up to 1,100 stores, or 20% of its locations in North America. On Thursday Staples (SPLS, Fortune 500) said it will close 225 stores.

"It's a tough decision to close stores. But it's something every good retailer does," said Staples CEO Ron Sargent in a call with investors. "Stores have to earn the right to stay open."

Other troubled retailers are also downsizing. J.C. Penney (JCP, Fortune 500) has announced plans to close 33 locations. Sears Holdings (SHLD, Fortune 500) is closing its flagship Chicago store and it's expected to shutter another 500 Sears and Kmart locations soon, according to Cowen retail analyst John Kernan.

Even Macy's (M, Fortune 500), which is doing relatively well, announced it is closing five stores as part of a cost-cutting effort.

Office Depot (ODP, Fortune 500) is also expected to shed some of the excess stores created by its recent purchase of OfficeMax. And there is a possible tie-up between Men's Wearhouse (MW) and Jos. A. Bank (JOSB) that will also probably lead to store closings.

Stores in prime locations should find new tenants fairly quickly, says Greg Apter, who is president of Chicago-based Hilco Real Estate and specializes in retail space. Other, less desirable locations will probably have to find non-retail tenants -- converting into everything from warehouses and churches to indoor go-cart tracks. 

Store closings typically come early in the year, after retailers close their books on the fourth-quarter's critical holiday shopping season.

"I'm not worried. What we're seeing is a continuation of a transition to a new, leaner industry that will continue," said Michael Niemira, vice president of research for the International Council of Shopping Centers.

Staples to close 225 stores

Part of the problem for stores is that there is just too much retail space in many markets. There are about 46 square feet of retail space for every man, woman and child in the United States, according to Robin Lewis, CEO of The Robin Report, a retail strategy newsletter. That's five times the space than in any other country,

"We've had overcapacity in this country for a long, long time," said Lewis. "The economy now has gotten to the point where it is forcing [retailers] to contract."

Competition from online retailers such as Amazon (AMZN, Fortune 500) hasn't helped. Radio Shack, Best Buy (BBY, Fortune 500) and other electronics retailers have become vulnerable to so-called "showrooming," in which consumers check out an item they want to buy in a store and then buy it at a lower price online.

Staples says it is looking to focus on online sales, which now account for nearly half of its revenue.

The growth in online sales is simply making problems at some chains more severe, experts say, not causing the problem by itself.

"It is too simple to say this is what Amazon has wrought," said Apter. "But the online business makes the market more saturated. That's enough to turn what might have been 100 store closings into 120."

  • Local NewsMore>>

  • Report: Air Algerie plane vanishes from radar

    Report: Air Algerie plane vanishes from radar

    Thursday, July 24 2014 7:28 AM EDT2014-07-24 11:28:48 GMT
    An Air Algerie flight from Burkina Faso to Algiers has disappeared from radar, the official Algerian news agency said Thursday.  Air navigation services lost track of the plane 50 minutes after takeoff early Thursday, last sited at 1:50 a.m. GMT (10:50p EDT), the agency said.

    More >>
    An Air Algerie flight from Burkina Faso to Algiers has disappeared from radar, the official Algerian news agency said Thursday.  Air navigation services lost track of the plane 50 minutes after takeoff early Thursday, last sited at 1:50 a.m. GMT (10:50p EDT), the agency said.


    More >>
  • Update: Autopsy reveals stab wound led to death of 4-year-old girl

    Update: Autopsy reveals stab wound led to death of 4-year-old girl

    Thursday, July 24 2014 4:50 PM EDT2014-07-24 20:50:12 GMT
    Victoria Wyatt (photo: family)Victoria Wyatt (photo: family)
    UPDATE: ATHENS, TX (KYTX) - An autopsy report reveals a stab wound to the chest contributed to the death of 4-year-old Victoria Wyatt.More >>
    UPDATE: ATHENS, TX (KYTX) - An autopsy report reveals a stab wound to the chest contributed to the death of 4-year-old Victoria Wyatt.More >>
  • Why Smith County won't be making rulings on immigration issue

    Why Smith County won't be making rulings on immigration issue

    We're learning more about what led Smith County commissioners to vote on some immigration resolutions and the reason for the outcomes. The commissioners court discussion Tuesday came down to what a county government's role is. More >>
    We're learning more about what led Smith County commissioners to vote on some immigration resolutions and the reason for the outcomes. The commissioners court discussion Tuesday came down to what a county government's role is. More >>
Powered by WorldNow

CBS19, MYTX & KCEB
2211 ESE Loop 323
Tyler, TX 75701
Phone (903) 581-2211
Fax (903) 581-5769

Powered by WorldNow
All content © Copyright 2000 - 2014 WorldNow and KYTX. All Rights Reserved. Users of this site agree to the Terms of Service, Privacy Notice/Your California Privacy Rights, and Ad Choices.