Online shopping, high rents take a toll on US retail stores

By BELINDA ROBINSON in New York | China Daily Global | Updated: 2023-07-26 09:29
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People go into a Bed Bath& Beyond store for a clearance sale in Garden City, New York State, on April 24. LIAO PAN/CHINA NEWS SERVICE

Repeated pattern

The pattern was repeated in Los Angeles, which lost 4 percent of its stores, and New York, which lost 3 percent.

The shops moved to cities such as Houston, JPMorgan Chase Institute found. Its data showed that Houston and Phoenix got 4 percent more new retail businesses at the same time.

In pursuit of those shoppers, some stores decided to move from major metro areas to the suburbs or smaller towns.

One of the reasons that smaller towns are attractive to store owners is that the rent is generally lower compared with large cities.

In San Francisco, rent for retail spaces was $43 per square foot, according to Cushman and Wakefield, a commercial real estate company.

In Los Angeles, it was $33 per square foot, and in New York, $32. But in Phoenix, Houston and Dallas, rent for retail space was between $22 and $23 per square foot.

The discount chain Big Lots announced it will close four stores in Colorado and three in California and move to smaller towns.

CFO Jonathan Ramsden said on a December earnings call, "Our real estate strategy is going to be increasingly oriented toward these rural small-town stores."

However, in a reversal of the trend, Lidl, a German discount grocery chain, closed five locations in four states — New Jersey, North Carolina, South Carolina and Virginia.

Lidl is going to larger cities, as it recently opened stores in Brooklyn, New York, Washington, and Greensboro, North Carolina.

Some of the country's largest department stores have not fared well either amid changing times.

Macy's will shut 125 stores in malls this year. It has already closed four stores in California, Colorado, Hawaii and Maryland.

JCPenney closed 150 stores since 2020. It will close stores in the states of New York and Indiana this year.

Nordstrom, a luxury department store, will close 15 locations this year in the US and Canada, including two in San Francisco.

The exhaustive list of stores that have been closed show that no store, big or small, innovative or traditional, has been able to escape the downturn.

Amazon Go, the online retailer's brick-and-mortar store, is set to close nine stores this year — two in New York, three in Seattle and four in San Francisco. The stores have no checkout counters; they are all automated.

Retailers are increasingly using less staff as they put in self-service checkouts. The average number of staff members in a store has fallen from 10.9 employees before the pandemic began in 2020 to 10.1 this year, according to data from the Center for an Urban Future in New York.

The lack of staff has caused retail jobs in New York to be down by 11 percent in the same period in 2020, the center found. Manhattan was particularly hard hit, with a 20 percent drop.

While some shoppers enjoy less interaction with staff, not everyone believes that automation gives the customer the best in-store experience.

Bob Phibbs, a retail expert with more than 20 years' experience and CEO of the Retail Doctor based in New York, believes that retailers must make it easier, not harder, for shoppers to have a seamless experience in a store especially when checking out.

"If I have to go through, check myself out, help myself out in the store, why am I going to a brick-and-mortar store?

"Everyone might say this is a good idea, but you have to ask, 'Is this making it more convenient or is it a way to make the shopper do more?' I always applaud Walmart for trying new things, but I hate those (self-service checkout) things," he told China Daily.

Organized crime

Big-box stores and pharmacy chains also are coping with the impact of organized retail crime on their businesses. Merchandise stolen on a large scale by gangs of thieves often is resold.

In San Francisco, robbery has increased by 12 percent this year compared with last year, the San Francisco Police Department said.

Walgreens initially blamed crime as the reason for closing five stores in San Francisco in 2021, but it has since backtracked.

The pharmacy chain has around 9,000 stores throughout the country. But at one of its San Francisco stores, photos and video posted online show freezers full of ice cream have been padlocked to deter thieves. Some staffers said thieves come in about 20 times a day to steal goods.

Thefts, called retail "shrink", reached $94.5 billion in 2021, up from $90.8 billion from 2020, according to the National Retail Federation.

Walgreens announced it would close 150 stores in the US and 300 in the United Kingdom this year to save money. It has already reduced store hours and trimmed corporate jobs in a first round of cuts. It said it wants to reduce $800 million in costs by 2024.

It said third-quarter earnings would be lower in part because it was no longer doing as many COVID-19 vaccines and tests as before. US President Joe Biden announced in April the COVID-19 national emergency response had ended.

San Francisco is losing other big names after Whole Foods closed its flagship store after staff members were assaulted; a machete-wielding man showed up; and a man overdosed from fentanyl in a bathroom. Tech staffers continuing to work from home also affected the store's traffic.

Office Depot and Anthropologie will follow suit and leave.

In New York, police said nearly one-third of all shoplifting arrests last year involved just 327 people.

The theft of items under $1,000 last year went up by 53 percent since 2019, researchers at the John Jay College of Criminal Justice found. Total revenue lost to retail theft was $300 million.

New York City Mayor Eric Adams lamented the thefts, saying in February, "We're losing chain stores that are closing down because of crime."

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