JLL Retail: Store closure summary, October 2017
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JLL Retail Research looks at coming closures, the impact of e-commerce on brick and mortar stores, how the store experience is changing and which retailers are actually expanding operations despite the current climate (as of October 2017).
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JLL Retail: Store closure summary, October 2017
- 1. Retail store closure summary 10-23-2017 JLL Retail Research
- 2. What’s new in closures? • Toys R Us has filed for bankruptcy protection. Toys R Us filed for Chapter 11, and plans to use its bankruptcy filing as a way to reemerge on the cutting edge of the retail world, closing underperforming stores and transforming others into "interactive spaces“. • Perfumania files for bankruptcy protection. Mall-based retailer chain Perfumania has sought chapter 11 protection with plans to reorganize around its better-performing stores. The company plans to close 64 of its 226 stores during the bankruptcy process. TBD closures +64 closures
- 3. Retailers to watch for closures Source: Credit Intell Retailer Credit Intell Rating Retailer Credit Intell Rating Academy Sports + Outdoors D1 Bon-Ton Stores E2 Boot Barn D1 Claire's Stores E2 J.C. Penney Company D1 Toys R Us E2 Jo-Ann Stores D1 99 Centers Only Stores F1 Tailored Brands D1 bebe stores F1 Staples D1 hhgregg F1 Christopher & Banks D2 Sears Holdings F2 Conn’s D2 Le Chateau F2 Destination Maternity D2 Gordmans Stores DIP Lands' End D2 Sports Authority DIP Stage Stores D2 Gander Mountain DIP Rent-a-Center E1 Gymboree Corp DIP Hudson's Bay Company E1 rue21, inc DIP Stein Mart E1 Aeropostale DIP Fred's E1 American Apparel DIP J. Crew Group E1 Michigan Sporting Goods DIP Neiman Marcus Group E1 Wet Seal DIP Rite Aid Corp E1 Credit Intell Rating Definitions CI rating Equivalent S&P rating Credit quality D1 B Below satisfactory D2 B- Below satisfactory E1 CCC+/CCC Poor E2 CC Poor F1 C Critical F2 D Critical DIP - Filed for bankruptcy • These retailers all have credit ratings below satisfactory. Future closures may be imminent.
- 4. What’s new in openings? • Lidl is expanding. By the end of September, the grocer will have opened 37 locations in five states on the Eastern seaboard: North Carolina (13), South Carolina (8), Virginia (14), Delaware (1) and Georgia (1). Lidl plans to open as many as 100 stores in the next year. • Aldi targets 2,500 stores by 2022. The grocer recently announced a $3.4 billion investment to boost its U.S. presence by nearly 50% to 2,500 stores by the end of 2022. This puts the company on a pace to become America’s third-biggest grocery retailer by locations behind Wal-Mart and Kroger. Source: PNC +100 new stores +800 new stores (by 2022)
- 5. More than 5300 locations will close by end of 2017 © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 5 0 500 1000 1500 2000 2500 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2 2018Q4 Effective closure date # of stores to be closed Source: Creditntell, JLL
- 6. California has highest planned closures © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 6 Source: Credit Intell, JLL *JLL-tracked closures 9.5% 7.0% 5.9% 5.0% 4.8% 4.6% 3.7% 3.3% 3.1% California Texas Florida Illinois Ohio New York Pennsylvania Michigan Indiana % of closures announced in 2017 The below 10 states make up just over half of announced closures in 2017
- 7. Apparel and electronics will make up almost half of 2017 closures © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 7 Source: Credit Intell,JLL *JLL-tracked closures effective in 2017 33% 16% 13% 9% 6% 5% 18% Closures announced for 2017 Apparel Electronics Shoe stores Department store Discount department store Grocery Other • Changing demographics, shifting consumer tastes in favor of discounters and fast fashion and some sales loss to online sellers have all helped to close some apparel stores. • Bankrupt retailers like The Limited, Wet Seal, BCBG Max Azria and American Apparel are leading the store closure count. • Electronics stores like hhgregg and Radioshack are also shuttering hundreds of locations due to bankruptcy.
- 8. Apparel and electronics closing the most stores © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 8 2736 1378 997 489 379 370 361 296 241 235 213 113 110 108 100 70 50 10 8 6 3 Apparel Electronics Stores Shoe stores Restaurants Specialty food & beverage Office supply Department stores Discount dept. stores Books & Music Sporting goods Specialty stores Grocery stores Dollar stores Home Furnishings Accessories Drug stores Auto centers Off-price retail Thrift stores Jewelry stores Wholesale clubs Announced closures Source: PNC, Creditntell, JLL
- 9. Retailers closing 100 or more stores © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 9 1000 700 400 379 350 300 268 250 240 220 200 188 180 172 171 160 150 141 140 135 120 110 106 105 100 100 RadioShack Payless Shoe Source rue21 Teavana Gymboree Office Depot Ascena Retail Group The Limited Family Christian hhgregg Banana Republic/Gap Kmart Bebe The Children's Place Wet Seal Crocs GameStop JC Penney Vanity Shop Sears BCBG Max Azria American Apparel Gordman's Stores Applebee's Foot Locker/Lady Foot Locker Michael Kors Announced closures Source: PNC,JLL
- 10. More than half of announced closures* due to bankruptcy © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 10 Source: PNC,JLL *JLL-tracked closures 52% 48% Announced closures Filing for bankruptcy Not filing
- 11. Retailers who recently announced bankruptcies © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 11 Source: PNC,JLL 1000 700 400 350 250 240 220 171 140 120 110 106 68 65 63 63 59 51 36 32 27 27 21 18 12 Announced closures
- 12. Apparel and sporting goods are seeing the most bankruptcies © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 12 Source: JLL Apparel 8 Sporting goods 5 Specialty stores 4 Shoe stores 3 Electronics Stores 2 Specialty 1 Discount dept. stores 1 Books & Music 1 Toys/Games 1 Grocery stores 1 # of retailers filing for bankruptcy
- 13. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 13 Source: PNC, JLL 1568 1220 712 240 213 207 106 65 18 Apparel Electronics Stores Shoe stores Books & Music Specialty stores Sporting goods Discount dept. stores Specialty Grocery stores Announced closures Apparel and electronics stores closing the most locations because of bankruptcy
- 14. Department and discount department stores will close over 650 locations © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 14 Source: PNC, Creditntell, JLL • Discount department stores like JC Penney, Kmart and Gordman’s are closing the most locations. JC Penney 141 Kmart 188 Gordman's 106 Macy's 76 Sears 135 Other 11 Announced closures
- 15. Midwest states have the most department store closures Source: Credit Intel, JLL Top 10 announced department store closures Number of announced department store closures
- 16. Purchases of office supplies move online © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 16 Office Depot 300 Staples 70 Announced closures • Office supplies are highly commoditized products, making it easy for consumers to purchase online. • As a result, office supply retailers are shrinking their store count. • Office Depot’s acquisition of Office Max means the retailer must also close redundant locations. Source: PNC, JLL
- 17. Sporting goods retailers are closing 235 stores © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 17 MC Sports 68 Golfsmith 59 Gander Mountain 32 Eastern Mountain Sports 27 Hibbett Sports 25 Bob's Stores 21 Big 5 Sporting Goods 3 Announced closures Source: PNC, JLL • There are five major bankruptcies happening among sporting goods retailers, resulting in 207 • store closures. • In comparison, Dick’s Sporting Goods is a strong performer and is steadily expanding its footprint, planning 43 new stores in the next fiscal year.
- 18. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 18 Yes, some retailers are expanding!
- 19. More stores are opening than are closing © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 19 -3133 -400 82 153 345 674 728 1700 1905 2026 Specialty softgoods Department stores Superstores/Wholesale clubs Specialty hardgoods Drug stores Supermarkets Bars/Restaurants Convenience stores Mass merchandisers Fast food Net store growth Source: IHL Group,JLL +4,080 Net Stores Opening
- 20. Despite headlines, retail openings still trounce closures MOVE-OUTS MOVE-INS 23.5 MILLION S.F. Mall square footage opened or closed over the last 12 months 15.7 MILLION S.F. Source: CoStar, JLL Research
- 21. 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 Millions Mall SF vacated Mall SF absorbed Mall space absorbed outweighs space vacated Source: CoStar, JLL Research
- 22. Wireless stores plan aggressive expansion © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 22 1820 1750 552 496 466 425 413 357 297 234 168 158 110 45 29 25 12 11 9 Wireless Dollar stores Apparel Health & beauty Restaurants Auto parts Convenience stores Grocery stores Discount department… Specialty stores Shoe stores Sporting goods Home furnishings Pet supply Wholesale clubs Home improvement Electronics Jewelry stores Department stores Announced openings Source: PNC,JLL
- 23. Retailers openings 50 or more stores © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 23 1500 1000 650 412 320 300 240 200 195 155 120 106 100 100 100 100 95 90 80 80 75 73 70 70 67 65 60 56 50 50 50 T-Mobile Dollar General Dollar Tree 7-Eleven Sprint Taco Bell Cantina Old Navy/Athleta Aldi O'Reilly Automotive Autozone GNC Sally Beauty Five Below Lidl Tractor Supply Ulta SportsClips Foot Locker/Lady Foot Locker HomeGoods IHOP Advance Auto Parts Carter's/Oshkosh F21 Ross stores Target TJ Maxx/Marshalls Hobby Lobby Hibbett Sports Aerie Hammer & Nails Grooming Skechers Announced openings Source: PNC, IHL Group, JLL
- 24. Why so many closures? © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 24 • Consumers tastes are changing, especially as millennials increase their prominence and buying power. • E-commerce penetration is a reality and it’s growing (although not as much as some people fear). • Consumers want experiences, convenience and value. Stores that fulfill those functions well stay open. Those that don’t will close.
- 25. Does e-commerce tell the whole story? © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 25 Nope. Here’s why: • While e-commerce is growing at a steady pace, the fact is most purchases still take place within a store. • What's more, 1.7 percent of sales occur on bricks-and-mortar retailers’ websites, and some online orders even take place inside a store. • Even more important: online retailers are opening physical locations, proving the importance of bricks-and-mortar. ICSC Research Analysis of U.S. Census Bureau’s Quarterly E-Commerce Report Pure-Play E-Commerce 3.3% In-Store E-Commerce 0.9% Non-Merchandise Receipts 0.6% Omni-Channel E- Commerce 1.7% In-Store sales 93.5%
- 26. What can we expect in the future? © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 26 The store function is shifting from simple transactions to full-on experiences. Here is what stores will increasingly look like: • Fluid transactions – no waiting at cash register. • Showroom/museum feel with curated products. • Emphasis on connecting with consumers over selling. • Experiential and interactive environments that entertain consumers.
- 27. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. The information contained in this document is proprietary to JLL and shall be used solely for the purposes of evaluating this proposal. All such documentation and information remains the property of JLL and shall be kept confidential. Reproduction of any part of this document is authorized only to the extent necessary for its evaluation. It is not to be shown to any third party without the prior written authorization of JLL. All information contained herein is from sources deemed reliable; however, no representation or warranty is made as to the accuracy thereof. Jllretail.com Contacts James D. Cook Americas Director of Research, Retail +1 317 810 7191 +1 602 363 6691 JamesD.Cook@am.jll.com Keisha Virtue Senior Research Analyst, Retail +954 990 0844 +954 449 3182 Keisha.Virtue@am.jll.com