Department-Store Closures on the Horizon

Department store sales are improving and many of the big chains are doing a good job controlling inventories after a dismal start to the recession. But for this to continue, they’re probably going to start closing some doors, according to one analyst.

“We’ll see more stores close than open in 2010,” says Walter Stackow, who follows retail for Manning & Napier, in a Reuters interview.

The article didn’t predict which chains would pare back, but pointed out that Kohl’s is winning its competition with J.C. Penney, and Nordstrom is outperforming Saks, so that might hold some clues. The main hope for Macy’s and J.C. Penney is that consumers will shift away from the deep-discount apparel players like TJX Cos. and return to a regular-priced environment.

What department stores do you see closing doors this year, or do you think the major chains can get by without shedding real estate?

ALSO: Walgreen’s Duane Reade Acquisition Makes it King of New York

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5 Responses to “Department-Store Closures on the Horizon”


  1. 1 Doug February 19, 2010 at 9:43 am

    Look to Dillards to continue to close select locations around the US. With mounting debt, it doesn’t look good. Nordstrom is an incredibly well run company and John and Blake have that brand that will last well into the future. JC Penney is nimble enough to change and switch strategies in order to respond to the marketplace.

    Kmart and Sears is another converstion entirely. That is a marrige that seemd to have delayed the envitable of at least one of the brands. Struggles ahead for that two headed monster. Kohl’s is the new Sears. Think about it.

    H&M and Forever 21 (the Ikea of the fashion indsutry) have taken the wind out of many apparel sales. Look for more change in 2010 – 2011.

  2. 3 Larry Ortega February 19, 2010 at 10:39 am

    Department store closures are inevitable for this decade and the replacement players are in the wings and many times they are not another department store. We are seeing that happen in the west. Costco has replaced the department store in a number of mall locations. So has Super Walmart and Super Target. Look for Fry’s Electronics and perhaps Bass Pro and Cabella’s looking at mall sites in the future. This new decade will bring a new evolution to malls, powercenters and lifestyle centers.

  3. 4 Mark February 19, 2010 at 11:49 am

    I agree with both previous submissions – however – I think that Saks Fifth Avenue, with its resort and Main Street stores, may end up trimming locations. Some of those locations – where the model is not a full line store – are embedded in tony locales and chic resort areas, many of which rely entirely on wealthy clients or those that aspire to be such. Take the “aspire to be such” consumers out of that critical equation, and you have (likely) stressed performance in units that are not the core business. I bet we see some of those close down. Neiman Marcus has spread too far, too, at times to the extent the brand (so coveted) seems a little bit “pedestrian” having surfaced in needless locations. Add to their situation the Cusp concept and the drag that probably generates, and there could be closings both of Neiman Marcus stores – if performance is low – and the Cusp concept. Nordstrom is entirely well positioned to “straddle the fenceline” between upscale cache and moderate/better with much relative ease – so they should be fine, I would say, except, maybe, a very few laggard performers. As for the others – Bloomingdale’s, Dillard’s, Macy’s, JC Penney, Lord & Taylor, Sears, etc. – I bet very careful analysis will continue to expose and close stores that do not meet the requirments – and why not? Many of been languishing not only the last year or so – but for years and years. Right now, lean, nimble and profitable is key for survival, strength and – what a concept! – financial discipline.

    The “others” that poach, inadvertently, sales – such as TJ Maxx, Marshalls, Target, and so on – may entrench loyalty gradually over time and the consumer’s mindset will thus begin to accept their offerings in the range of acceptable choices.

    I am not too sure about these large stores by H & M and Forever 21 – just do not make sense to me – but who knows?

    It surely will be interesting to see what happens moving through the next several years.

  4. 5 Ryan February 26, 2010 at 1:26 pm

    Discount Retailers have become acceptable substitutes to the Department Store in this environment. People still need to feel the satisfaction derived from consumption, despite harsh employment conditions. Buying anything at all is the contemporary solution to one-upping your neighbor. However, as the economy slowly recovers consumers will begin to feel that insurmountable pull toward luxury or near-luxury retailers. The cycle will never end…


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