Over the past year, the retail industry has been in a downward spiral. A lot of U.S. malls saw a decline in occupancy rates of many different stores over the past two years. Many retailers like Sears and Claire's shut down many of their stores, leaving commercial retail estate in the dirt. However, many shop owners and companies believe that this year the retail industry will make a comeback.
What Exactly Happened?
With the rise of e-commerce and online retailers, the decline of brick-and-mortar stores as well as the importance of shopping malls started to lose popularity amongst consumers. Over the past few years, shopping from places like Amazon (AMZN - Free Report) and Warby Parker have become a more comfortable option. According to The Atlantic, Amazon's sales for North America alone increased from $16 billion to $80 billion between 2010 and 2017.
Due to increased online shopping, stores saw a decline in revenue which led to closing down stores, and in some cases, bankruptcy. For example, retailer Abercrombie & Fitch (ANF - Free Report) closed around 40 of their stores last year and plan to close another 60 this year. Besides that, all-time favorite toy retailer Toys R Us went bankrupt this past year and closed its stores. According to Fortune, analysts believe that this trend will continue to occur, especially amongst the top five department stores like Macy’s (M - Free Report) and Kohl’s (KSS - Free Report) . Many malls are anchored by these stores, along with smaller retailers. So if this trend continues, then that may not be a good sign for the retail industry.
A Little Bit of Hope
In the past year, many other companies have taken these vacant spots for their own stores along with opening more stores outside of the mall. The American real estate and shopping mall operator, Simon Property Group (SPG - Free Report) , currently operates over 100 malls in the U.S. Many of these malls are still operating, and in their most recent quarterly report, Simon reported that occupancy rates were almost 95% this year.
Along with that, many companies like Ross Stores (ROST - Free Report) and Ulta Beauty (ULTA - Free Report) are looking to open more stores, increasing brick-and-mortar presence in the industry. Digital retailers are also looking to find spaces in malls, so they can provide their service physically as well. Similarly, many international brands like Uniqlo and Primark that have a strong presence in their respective countries are looking to expand into the U.S.
So there seems to be a light at the end of what has been a very dark tunnel. Retailers are looking to find their space and open more stores where they hope to achieve success. There is still a bit of hope for these large malls to keep their place in the retail industry and not be overpowered by online shopping.
It’s not over for shopping malls as some might think. Even though the retail industry went through a rough patch, retailers have found ways to open new and improved stores in the unoccupied spaces in shopping malls. Retailers can expect to see a surge in customers if they continue to progress forward.
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