Get Ready for Retail Carnage in 2018 — It Is Already Beginning

Saturday, January 06, 2018
GoLocalProv Business Team

Photo: Flickr Mike Mozart
The 12 days of Christmas might have just ended, but the carnage for brick and mortar retailers is already in full bloom.

So far, Macy’s has announced they will fire 5,000 workers and the closure of eleven stores.

Kmart and Sears announced 103 more store closures. It is hard to believe that they had that many stores left after the number of store closure announcements in the past 18 months.

While Rhode Island is still smarting from the loss of Benny’s — and the closure of 31 stores in the region and the loss of more than 700 jobs — that may just be one milestone in the endless, and now ever more inevitable, decline of chain mass market brick and mortar.

Another big loser this holiday was brick-and-mortar retail bookstore chain Barnes and Noble, who reported a 6.4 percent decrease in sales during the 9-week key retail holiday sales period. Barnes and Noble stock was down nearly 14 percent on Friday.

“Unfortunately, the folks who were struggling in 2017, who may have had a good if not a great holiday, are likely to struggle again in 2018 because the fundamental behavior of the customer isn’t going to change,” said Professor Mark Cohen of Columbia University in a piece published by the Wharton School of Business on Friday. “The online business continues to expand at the expense of brick and mortar, and the level of promotion that continues to step up is truly unsustainable for many of the legacy retailers who are engaging in it.”

Overall, retail sales for the holidays were up — a reported 5 percent. But the rich got richer and the distressed fell further behind. Online sales had another banner year — up over 18 percent — consulting group Bain and Company says that Amazon may have captured more than 50 percent of the upswing in spending.

Amazon Crushed All Competitors

“Amazon captured 89 percent of all online holiday spending in the five-week period beginning on Thanksgiving, according to an analysis of credit and debit-card transaction data by Earnest Research in New York. Wal-Mart remained a distant second at 4.4 percent,” according to Financial Post.

Amazon expected to gobble up 50% of growth in retail sales this holiday: Bain & Company from CNBC.

The Amazon dominance event attracted a Tweet from President Donald Trump.


One Rhode Island Company is Celebrating the Holidays

For one Rhode Island company, fast growing jeweler Luca + Danni, the holiday’s were very cheery. Sales were up both at retail, but especially via online.

Overall, the company saw sales jump 138 percent -- a 21 percent increase at brick-and-mortar and 312% increase online.

"We've focused on creating a digitally native brand based on core values of handcrafted, American made jewelry at an affordable price, “ said Fred Magnanimi, CEO of the Cranston-based brand.

Luca + Danni show record growth this holiday season
“The digital tools available today have allowed us to create an amazing community of Luca + Danni fans (we have over 400,000 followers on social media) and we're continually focused on creating the best possible consumer experience. That being said, I still see physical retail as an important extension of our brand and if done correctly, it's a powerful combination. The best recent example of this is the Everlane store that just opened up in New York City. Retail is changing and the brands that focus on consumer and consumer experience are the ones that are winning." 

The Future on Route 2 and the Malls?

What will be the impact of the mass retailer store closings on Rhode Island jobs and the economy is an unknown, but all indications are that 2018 and beyond. Consumers are flocking to Amazon’s two day delivery via Prime.

The national job numbers for December showed growth, but not for retailers. “Amid challenges stemming from digital shifts and a wave of store closings, retailers shed about 20,300 jobs in December, with department stores losing 8,200 and general merchandise stores ditching 27,300,” reports the trade magazine Footwear News.

Retailers in 2017, ended the year having announced the closure of approximately 7,000 a dubious record. 

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