Kohl’s, J.C. Penney and Walmart Will Close The Most Stores In 2017
U.S. retailers have a problem they can’t easily resolve: They have too many stores. And even though they’ve already announced slews of store closings, it’s increasingly likely they’ll have to shutter even more over the next few years. That’s especially the case as consumers keep shifting their spending online, which has left the U.S. awash in unwanted retail space, or “overstored.”
According to real estate information firm CoStar, nearly 1 billion square foot of retail space will be “rationalized” in the coming years through store closures and conversions to other uses. Many retailers also are seeking rent reductions as their productivity has slumped from an industry average of $330 in sales per square foot from $350 per square foot a decade ago.
The level of “overstoring” may only get worse. Retail analyst Jan Rogers Kniffen expects about half of all retail sales to be online by 2030, a huge increase from current figure of about 10 percent.
“A lot of these retailers are still in denial,” said Brian Yarbrough, a retail analyst at Edward Jones. “I think the Kohl’s (KSS), the J.C. Penneys (JCP) of the world, they’re in denial. At some point, there’s probably not a need for 2,400 Kohl’s and J.C. Penney’s across the United States. There’s probably not a need for 5,800 Walmart (WMT) Supercenters.”
Officials from J.C. Penney didn’t immediately respond to a request for comment for this story. A Kohl’s spokesperson declined to comment beyond pointing to executive statements on earnings conference calls about “the importance of stores.” Walmart spokesman Randy Hargrove said the company doesn’t comment on analyst reports, but he noted that in October Walmart U.S. CEO Greg Foran said “next year you will see us put more capital allocation towards remodels versus new stores.” Hargrove added: “We still see a need for supercenters.”