As Sears Holdings Corp. (NASDAQ: SHLD) and Best Buy Co. Inc. (NYSE: BBY) posted poor earnings, and analysts said Sears may close ever more stores, the possibility that major retailers will eliminate thousands of locations in total has increased.
Some announcements about “downsizing” have already been made. Office Depot Inc. (NYSE: ODP) repeated it would shutter about 400 locations now that its merger with OfficeMax is complete. Rival Staples Inc. (NASDAQ: SLPS) announced it would shut down 140 locations. RadioShack Corp. (NYSE: RSH) wanted to close 1,100 stores, but large lenders forced it to cut that number to about 200.
And the year is not half over.
Most experts believe that Amazon.com Inc.’s (NASDAQ: AMZN) success has caused much the problems for retailers. With its annual sales approaching $100 billion, it may be 20% the size of Wal-Mart Stores Inc. (NYSE: WMT) this year, by the revenue measure. However, brick-and-mortar retailers may have damaged themselves just as much. Staples, OfficeMax and Office Depot opened thousands of stores over several decades. As they pushed for growth, those numbers grew higher and higher. These three were not the only ones in the office supply market. Walmart’s Sam’s Club and Costco Wholesale Corp. (NASDAQ: COST) both took significant market share as well. Even without Amazon, the competition simply may have been too much.
ALSO READ: America’s Most Popular Stores
Consumer electronics retailers also may have overbuilt. Many major retailers have consumer electronics sections in their stores. Best Buy and RadioShack had other hurdles as well. The prices of many consumer electronics have plunged over the past few years, as competition among companies like Samsung and LG has sharpened, and the actual costs to make many products has plunged.
The list of retail segments with problems would not be complete without apparel. Gap Inc. (NYSE: GPS) announced more bad numbers. In 2011, it disclosed it would close 21% of its stores. Since then, competition from smaller retailers, led by Abercrombie & Fitch Co. (NYSE: ANF), has sharped. Gap many need to consider its store count again.
The number of stores that major retailers will close this year may stretch further into the thousands, as plans for many are already in place.
ALSO READ: Why Does 7-Eleven Have 52,000 Stores?
Take This Retirement Quiz To Get Matched With An Advisor Now (Sponsored)
Are you ready for retirement? Planning for retirement can be overwhelming, that’s why it could be a good idea to speak to a fiduciary financial advisor about your goals today.
Start by taking this retirement quiz right here from SmartAsset that will match you with up to 3 financial advisors that serve your area and beyond in 5 minutes. Smart Asset is now matching over 50,000 people a month.
Click here now to get started.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
