More department store closures have been projected for 2023, with even some of the most popular retailers potentially affected. With Macy’s plans to close 125 locations over the next three years, experts warned that other major retailers such as Nordstrom and Kohl’s could be following in their footsteps.
In a Business Insider report, UBS investing experts expressed concerns over the future of mid-tier retailers. Their message was clear: another wave of the ‘Retail apocalypse’ is on the horizon. Beginning in 2017, various department stores began shifting from their brick-and-mortar business structure to a fully-online model.
Then hit with the pandemic and now facing climbing inflation, even more retailers are under pressure to close up shop at their unprofitable locations. UBS noted that the retail industry lost 1,800 stores between January 2020 and March 2021.
“These trends are likely not good for department stores as both luxury companies, as well as off-price retailers, compete directly with department stores,” wrote analysts Jay Sole, Mauricio Serna, Shoshana Pollack, and Tiffany Agard.
Pandemic aftershocks did not impact all stories equally. Those who survived, such as Macy’s, Nordstrom’s, and Kohl’s turned to brand partnerships, beauty sales, and off-price stores to increase sales.
The beginning of 2022 was looking up for these retailers, finding that more shoppers were returning to travel, work, and socialize. Unfortunately, sales have stalled yet again, with department stores like Nordstrom and Kohl’s reporting lower third-quarter sales compared to last year.
Fears of a recession could be at fault for the less-than-impressive holiday sales trends. Shoppers have turned to chains like Walmart, Costco, and TJ Maxx to save a few bucks, leaving mid-tier retailers especially vulnerable to financial strains. (SOURCE)
