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https://scmp.com/business/article/3021498/large-us-stores-might-be-closing-smaller-niche-retailers-are-taking-their
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Large US stores might be closing, but smaller niche retailers are taking their place, analysts say

  • There’s no doubt retail was overbuilt over the past 10 to 20 years, Florida Retail Federation says
  • While online sales have had an impact, 90 per cent of retail sales still occur in bricks-and-mortar stores, AT Kearney says
A closed retail store in Manhattan, New York. Photo: AFP

There is a saying that when one door closes, another opens. In retail, it is true.

You might have noticed some major chain stores such as Sears and Kmart leaving your neighbourhood. At the same time, you could see new stores popping up, some with less familiar names such as Aldi and Trulieve.

Nationally, large stores are closing, “but there’s just as many, if not more, stores opening”, said Katy Welsh, senior director for Colliers International, a real estate and investment management company with South Florida offices.

“The general public says, ‘Oh no, another store closing!’ But we look at it as ‘Thank goodness’. Look at how much more money the shopping centre is going to make with that space,” Welsh said.

Zach Winkler, retail lead in South Florida for commercial real-estate services firm Jones Lang LaSalle, agreed: “People like to talk about doom and gloom. But when I look at the numbers, it’s telling the opposite story. There are new concepts.”

Gyms, schools, urgent care centres and grocery stores, among others, are leasing spaces once occupied by former Sears or other stores, the International Council of Shopping Centres in New York has said. Photo: AFP
Gyms, schools, urgent care centres and grocery stores, among others, are leasing spaces once occupied by former Sears or other stores, the International Council of Shopping Centres in New York has said. Photo: AFP

Gyms, schools, urgent care centres, grocery stores, theatres, sports complexes and day care centres are leasing spaces once occupied by former Sears or other stores, according to the International Council of Shopping Centres in New York.

Different types of stores are opening in strip malls. These include discount stores, smaller grocers, medical marijuana dispensaries and clinics, and fitness centres and game rooms, experts said.

Welsh said the tri-county region of South Florida is attractive to retailers because of its year-round shopping and robust tourism. “Compared to the rest of the country, we have a strong market,” Welsh said.

Payless ShoeSource is among chains that have filed for bankruptcy this year. Photo: TNS
Payless ShoeSource is among chains that have filed for bankruptcy this year. Photo: TNS

Stores have closed as some chains filed for bankruptcy this year, including Charming Charlie, PayLess ShoeSource and Gymboree. Other troubled major chains include Sears, Kmart, Office Depot and OfficeMax.

Winkler said that while PayLess ShoeSource stores are closing, the Sketchers brand is opening stores.

“There’s no doubt retail was overbuilt over the past 10 to 20 years. You combine that with the emergence of online shopping and that expedited the process of contracting the retail industry,” said James Miller, spokesman for the Florida Retail Federation. “We’re seeing a levelling off to the right amount of stores that Florida should have,” Miller said.

There have been 7,426 store closures and 3,039 store openings nationwide so far this year – compared with 5,864 closures and 3,258 openings for all of 2018, according to Coresight Research, which specialises in retail research. US store closures could reach 12,000 by the end of 2019, according to Coresight.

There are more opportunities for smaller stores as big-box stores close or reduce space, according to Coresight Research, which specialises in retail research. Photo: AFP
There are more opportunities for smaller stores as big-box stores close or reduce space, according to Coresight Research, which specialises in retail research. Photo: AFP

Coresight noted that stores such as Charming Charlie are “ubiquitous”. They just cannot compete with retailers including Amazon and Walmart also selling inexpensive accessories.

While the explosive growth of Amazon and online sales in general is having its impact, 90 per cent of retail sales still occur in bricks-and-mortar stores, according to global management consulting firm AT Kearney.

Among the top retail stores expanding nationwide are: Dollar General, Dollar Tree, Family Dollar and Aldi, according to Coresight.

Dollar General, which has 850 stores in Palm Beach, Broward and Miami-Dade, plans to add about 975 stores through the end of the year.

Welsh said there also are more opportunities for smaller stores as big-box stores close or reduce space.

“When a Sears or Kmart closes, there’s a big piece of real estate,” she said. Landlords are filling these spaces with several smaller retail tenants. At the same time, many big-box stores such as Target are opening smaller stores aimed at a certain market, such as college students.