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Store Closures Show Signs of Retail Chains' Future Survival; Increase Expected Over Next Ten Years

Jan 22, 2014 04:45 PM EST | By Justin Stock
store, closures, retail, chains, survival, Target, Kmart, Sears, trends

Less shops and not as much stores will make up the future of retail in the United States CNBC reported Wednesday.

Target announced cuts to 475 positions Wednesday, and Sears in closing its main store in Chicago April 1 CNBC reported.

"I believe we're going to hear a lot more announcements in the coming months," Michael Burden, a principal at Excess Space Retail Services told CNBC. "It's "an indication that there is a shift in the retail environment and it's one that will continue," Burden told CNBC.

The next five to 10 years will see a one-third and one-half decline because shopping trends are moving away from traditional visits to stores into internet buying, and not requiring retailers to have more products on store shelves CNBC reported.

"With mall traffic trends very challenging and J.C. Penney facing its own significant company-specific issues, we do not believe a 1,000-plus store fleet is appropriate," Paul Lejuez, an analyst at Wells Fargo said in a memo CNBC reported. "In our view, the company needs to close several hundred stores to operate more efficiently, but that is not easy to accomplish overnight," Lejuez said in the letter CNBC reported..

"There is often a mismatch between the number of stores retailers operate today compared to how many they would choose to operate if they had to do it all over again," Lejuez said in the note CNBC reported.

"Stores are making a long-term bet on technology," Brian Sozzi an analyst at Belus Capital Advisors told CNBC. "It simply doesn't make strategic sense to enter a new 15-year lease as consumers are likely to continue curtailing physical visits to the mall," Sozzi told CNBC.

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