Retail real estate experts continue to insist that e-commerce is more of an opportunity than a threat to bricks-and-mortar retailing, bolstering marketing outreach and customer engagement. On the surface it may seem that retailers’ fear of e-commerce competition has passed. For example, Simon Property Group (the country’s top retail center owner) recently released a report arguing that “mall shopping has a smaller environmental impact compared to online shopping” and cited the following statistics:
- Online shopping has an environmental impact that is 7 percent greater than mall shopping if shoppers bought the same number of products in at a mall as they did in an online store;
- Thirty three percent of online purchases are returned versus 7 percent of bricks-and-mortar purchases;
- Physical retail generates five times more jobs than online shopping for the same value of sales.
So why have so many physical retailers been closing up shop? Retailers are pouring “huge investments” into e-commerce, determining their physical stores are too big to sustain, according to Howard Davidowitz, chairman of Davidowitz & Associates, Inc., a national retail consulting and investment banking firm headquartered in New York.
“E-commerce is growing 12-13 percent per year, physical stores 2-3 percent per year, meaning there are less available dollars for physical retailers. That’s why we have store closures,” says Neil Stern, senior partner at retail consulting firm McMillan Doolittle.
In addition, while consumer confidence started to increase in the past few years, consumers’ willingness and ability to spend on discretionary purchases may not have had enough time to offset all the damage done by the Great Recession.
Here, we look at some retail chains that continue to struggle and may or may not survive long-term.