21 January 2013
BUSINESS: As a result of increased taxes and a slowing GDP growth, retail stores are being forced to close.
By Kate Weggeland, Staff Writer
Since the start of 2012, retail stores have already closed at a rate 25 percent higher than the previous year. Many are predicting retail stores will close at the same, if not higher, rate during 2013.
“The consumer is 70 percent of GDP. If growth is decelerating, how are you going to have [retail] growth? You are not, you are going to go on closing more stores,” Howard Davidowitz, a chairman of retail banker and consultant of Davidowitz & Associates, said.
Although the increasing vacant store windows may not be appealing to the eye, these closed doors are becoming the landscape of shopping malls and storefronts. Many stores such as Blockbuster, Sears, Abercrombie & Fitch, Pacsun, Gap and Payless will close hundreds of locations across the nation in 2013.
Blockbuster, which was bought out of bankruptcy by Dish Network, is continuing to downsize by cutting one third of its already dwindling storefronts.
Abercrombie & Fitch announced that 180 of its stores will be closing up shop this year. By closing storefronts in the United States, Abercrombie & Fitch will be able to expand overseas and escape the unprofitable mall locations.
Sears announced that 172 of its stores will be closing this upcoming year. “Chairman Eddie Lampert has sold off a lot of his best real estate, as the company slowly but surely fades away. Expect strong brands like Craftsman and Kenmore to survive at other places,” Tom Van Riper, a member of Forbes, reported.
Pacsun (Pacific Sunwear) is looking to close about 120 stores this year. Pacsun began downsizing in 2011 and is looking to close even more locations.
Gap announced that 100 of its storefronts will also be closing this year. Gap is “sitting on plenty of cash, but a multiyear downsizing plan continues with 100 more stores. U.S. cutbacks were expected to total 700 stores between 2007 and 2013, and coincide with expansions into Asia,” Van Riper said.
A number of stores are looking to close many of their storefronts instead of expanding.