National retailers step up the pace of store closures

National retail chains are closing hundreds of stores and more are on the way.

Retailers are disappearing from shopping centers in Maryland and throughout the United States at a pace not seen in years as familiar brands go out of business or attempt to stay alive by closing some stores.

Online shopping has changed how people buy things, and retailers that fall between discount and luxury are struggling the most.

This year alone, at least 13 retailers are closing more than 1,500 stores nationwide. The Limited and Wet Seal — with more than 400 apparel stores between them — have gone the way of Sports Authority and Radio Shack, disappearing altogether.

Consumers are visiting stores less frequently and increasingly turning to computers and mobile devices to browse, shop for deals and complete purchases. Such shifts mean retailers need fewer physical stores and less space and inventory at a time when the nation is already "overstored," experts said.

"It's going to be a very difficult year," said Mark Millman, president and CEO of Millman Search Group, a retail consulting and executive search firm. "We are over-retailed. Mall traffic is down in every center. The consolidation will be increasing."

He said his firm is gearing up to help liquidators staff the many going-out-of-business sales that retailers run when winding down operations.

"Liquidators are telling me it's the worst they've seen in 30 years," Millman said. "The number of closings are fast and furious."

Store-closing announcements typically come after the dust settles from the crucial holiday selling period and after retailers report and assess end-of-year sales and profits. Many retailers turned in disappointing financial results this past holiday season and are looking to trim costs. Others have chosen not to renew leases when they expire.

This year, many retailers renting space in older or less successful shopping centers are choosing that option, said Farla Efros, president of HRC Retail Advisory in Toronto.

A trip to the mall is not the social outing it once was, she said.

"What's happening is the traffic is completely dropping off for those malls," Efros said. "Trips overall are down, and I believe it's the new normal. I don't believe there will be an upsurge in people running to the malls. ... People are using e-commerce to browse, and when they are at the point of purchase ... that's when they make the trip to the mall."

Last week, electronics and appliance retailer hhgregg said it would close all its Maryland stores, including six in the Baltimore area, as it pulls out of the Mid-Atlantic. Abercrombie & Fitch announced plans to shutter about 60 U.S. stores when leases expire. And shoe retailer Crocs Inc. said it expects to close about 160 stores by the end of 2019, cutting its store count by a fifth.

Those announcements follow a spate of others since the beginning of the year.

BCBG Max Azria Group, which filed for bankruptcy last week, began closing about 120 U.S. stores in February, saying it's adapting to "fundamental changes in the industry, including how customers shop," and focusing on its digital and web channels and selected retail locations and in-store boutiques.

The BCBG closings include a factory store in Arundel Mills in Hanover and two mall stores, at Towson Town Center in Towson and at Wisconsin Place in Chevy Chase. The women's apparel retailer still will operate in-store boutiques at Lord & Taylor locations in Annapolis, Columbia, White Flint Mall in Kensington and Lake Forest Mall in Gaithersburg, a spokeswoman said.

The Limited closed all its 250 stores, including six in the Baltimore area, as the chain stumbled into bankruptcy. Family Christian closed all its 240 bookstores, including one in Elkridge.

"In an increasingly challenging environment for mall-based retail and women's apparel, we are very disappointed that the company has had to make the difficult decision to close its retail locations," Sun Capital Partners Inc., the private equity firm that owned The Limited, told Reuters in an emailed statement at the time of the closings.

JCPenney, Sears and Kmart all are closing stores this spring, while Macy's said in August it would close 100 of 730 stores, though no Maryland closings have been announced.

JCPenney, which has six Baltimore-area stores, said it will identify the 140 stores it plans to close by mid-March, with liquidation sales slated to start by late spring. Sears Holdings has announced it will close 108 Kmart stores and 42 Sears stores this spring, with the Kmart on North Point Boulevard outside Baltimore among them.

Many department stores have lost ground to mass discounters such as Wal-Mart and Target that have worked to improve service and selection and can offer lower prices, said Jie Zhang, a marketing professor at the University of Maryland's Robert H. Smith School of Business.

"They're all retailers competing in the middle-of-the-road spectrum when it comes to price points, service, assortment, and they've been having a more and more difficult time differentiating themselves from competitors," Zhang said. "They don't have a unique value proposition."

That doesn't mean some stores aren't doing well. Chains that specialize in home improvement, optical services and pet supplies are booming, Millman said.

Home Depot, for instance, has performed well in a strong housing market because it caters to both do-it-yourself consumers and commercial contractors. Pet-supply stores have made the in-store experience an attractive one for pet owners and their animals. And optical services are an in-store necessity for an aging population, he said.

"If you have trouble seeing," he said, "that's one area ... you can't put off."

The stores that have made it easiest for customers to shop when and where they want, whether online or in stores, have fared better than those that have failed to develop a strong web-based shopping platform, Zhang said.

"hhgregg is not one of those retailers," she said. "Even though it has online stores, it has not been at the forefront of developing multi-channel" options.

Efros said the "supercenter" concept featuring big-box retailers that was popular a decade ago is likely on the way out as well. Less inventory is required because customers have become accustomed to using store kiosks to get out-of-stock inventory shipped to them.

"The retailers that are doing well are the ones that have smaller formats" and lower fixed costs such as electricity and labor, Efros said. "The whole role of the store is different."

lorraine.mirabella@baltsun.com

lorraine.mirabella@baltsun.com

2017 store closings

Affecting Baltimore

American Apparel: all 110 stores, including one in Federal Hill

BCBG Max Azria: 120 U.S. stores, including one in Towson and one at Arundel Mills

Family Christian: all 240 stores, including one in Elkridge

hhgregg: 88 stores, including all six in the Baltimore-area

Sears/Kmart: 150 stores, including a Kmart on North Point Blvd. in Dundalk, leaving 10 Sears and 4 Kmarts in Baltimore region

The Limited: all 250 stores, including six in the Baltimore area

Wet Seal: all 171 stores, including at least six in Baltimore region

Possibly affecting Baltimore

Abercrombie & Fitch: 60 stores; it has stores in Columbia and Towson

JCPenney: up to 140 stores, with list due in mid-March; five Baltimore-area stores

Macy's: 100 stores, but none of its seven Baltimore-area locations was included in the 68 closings announced in January

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