by Sheridan Cyr
Two weeks ago, Macy’s announced that it would be closing 36 locations around the U.S., including the store located at Enfield Square in Enfield, Conn., in response to in-store sales declines this holiday season. In line with the closings, around 4,500 employee positions will be eliminated.
According to a USA Today article from early January, “An average of three to four positions at each of approximately 770 Macy’s and Bloomingdale stores,” and “about 3,000 associates will be affected.”
The article offers one possible reason for the closures being the “warm” season, citing that customers were not rushing in for scarves, jackets, boots and other winter outerwear. However, what it really comes down to and they are reluctant to face, is that in-store sales are just not convenient anymore. The whole world has turned their business to online pursuits, and Macy’s is no different.
After rent, lighting, heat payments, cleanliness and repair costs, it’s expensive to operate a store. With more consumers shifting their shopping to phones and laptops, shopping centers are going vacant while maintenance payments are still required.
In a January 2015 Forbes article, Tim Worstall wrote that 12 percent of stores on High Street, a comparative downtown shopping area in his native home of Britain, were vacant. As this article was written more than a year ago, it’s important to consider these numbers presently.
Worstall used information provided by The New York Times to display his point. “About 80 percent of the country’s 1,200 malls are considered healthy, reporting vacancy rates of 10 percent or less. But that compares with 94 percent in 2006, according to CoStar Group, a leading provider of data for the real estate industry.”
“Nearly 15 percent are 10 to 40 percent vacant, up from five percent in 2006. And 3.4 percent — representing more than 30 million square feet — are more than 40 percent empty, a threshold that signals the beginning of what Mr. Busch of Green Street calls “the death spiral,” added Worstall.
He also noted that according to Green Street Advisors, a company that tracks the mall industry, more than two dozen strip malls have been closed since 2010 and at least an additional 60 are “on the brink.”
Macy’s is not the only shopping center closing stores due to this issue of in-store vacancy; according to a
Cincinnati Business Courier article from last week, K-Mart and Walmart will be closing several locations by spring as well, citing similar reasoning.
It appears the Internet has won yet again.