It was a great holiday season in the retail world – for Mr. Grinch!
As retailers begin to preannounce year-end results, we are learning that the assault on department stores and other traditional retailers from ecommerce, price sensitive consumers and a tepid economy continues to batter revenues and profits. Each holiday season it gets a little worse as retailers race to cut prices and downsize faster than consumers flee their venues for the comfort of shopping on-line. This past year, that trend continued.
Department store sales have dropped $7.2 billion from 2001 to $12.7 billion today according to BMO’s Jack Ablin (and that’s nominal so in inflation-adjusted terms the drop is much more severe). Troubled women’s apparel retailer Limited Stores announced last week that it is closing all 250 of its stores nationwide and will try to operate purely as an online company. According to RetailNext, a retail tracking company, sales at brick-and-mortar stores sunk by 10.3% in December compared to 0.4% in 2015. The National Retail Federation expects holiday sales excluding cars, gas and restaurants to rise 3.6% to $655.8 billion in 2016 with online sales surging 19% to roughly $98 billion and brick-and-mortar sales dropping by tens of billions of dollars.
With numbers like that, it’s no surprise that the nation’s largest retailers are announcing massive store closings and job cuts. And this store is experiencing one of the biggest meltdowns.