Does NJ Have Too Many Stores? Retail Industry is Changing
Sports Authority is in the process of shutting down every location. Each major department store chain reported a drop in earnings during the first quarter of 2016. Clothing retailers Pacific Sunwear and Aeropostale, both struggling with debt, have filed for bankruptcy protection.
According to Howard Davidowitz, chairman of retail consulting firm Davidowitz & Associates, all of these stories prove the region and country are in the middle of a "dramatic change in the retail business."
Even the largest retailer in America, Wal-Mart, announced this year it would shut down nearly 270 stores to reposition itself in a changing retail world.
Consumer habits are the main culprit in this wild shift, according to Davidowitz.
"It's across the board where the consumer is spending less and less and less and trading down," Davidowitz said. "The middle class has been decimated. They don't have money."
So cash-strapped shoppers are shying away from the high-end and specialty retailers, and are heading to cheaper alternatives such as Dollar Tree, Aldi and T.J.Maxx.
"Basically, the lines have been blurred among store types, with many more types of merchandise offered by companies such as pharmacies that have rounded out their offerings," said Carol Kaufman-Scarborough, professor of marketing at Rutgers-Camden. "These compete directly with the specialty retailer...who are likely to be patronized when specialty merchandise is desired."
But this trend does not suggest every major retailer will throw in the towel. Many are just trying to adjust. The fastest-growing divisions for Nordstrom and Saks Fifth Avenue, for example, are their discount outlets.
Not every store closure represents bad news or bad management, Davidowitz noted. It could just be the best move in "the most over-stored country in the world," which also happens to be a country whose consumers depend largely on online shopping.
"Everybody in the retail business is building their own online business," he said. "All of this is going to be result in fewer stores, fewer malls, smaller stores."
Walmart and Aeropostale locations in New Jersey will not be affected by the companies' announced closures. Sports Authority's going-out-of-business sales are expected to begin by the end of this week and run through much of the summer.