ECONOMIC WOES STILL HITTING THE RETAIL SECTOR: FOUR MAJOR CHAIN STORES TO EFFECT PARTIAL CLOSURE OF OUTLETS.

ECONOMIC WOES STILL HITTING THE RETAIL SECTOR: FOUR MAJOR CHAIN STORES TO EFFECT PARTIAL CLOSURE OF OUTLETS.

The beginning of the year is the time when most retailers must reckon with the results of the holiday season.  If the season has been disappointing, some retailers who already have seen negative growth in the near past, must make the fateful decision to curtail the number of outlets.

Some retailers have over performed.  Those are expected to add stores.  However, the size of closures and more importantly, the names of the retailers attached to those closures indicated that the recovery might not be as quick or painless as some wish it to be.

One of the worse hit is Barnes and Noble.  Not too long ago, its largest competitor, Borders Book, which owned Brentano and Waldenbooks shuttered quickly after filing for bankrupty relief.  

Aside from minor chain, Barnes now stands alone as a major book retailer. However, it still needs to shutter a total of between 190-240 outlets of it more than 1000 nationwide.  Its stock has had a 36% fall in the past year.   Many blame Amazon.com and online retailers for the company's struggles.

Another large retailer who has seen substantial negative revenue returns, is J.C. Penney.  They are slated to shutter nearly 350 underperforming stores.  

Two other major retailer who will be forced to close some stores are Sears and Roebuck and Best Buy.  

Is the era of big box retail coming to an end? Not so fast, say some.  But the harsh reality is that the old strategies of coupons and discount do not seem to be working as well.  Many customers can and will find better prices online, albeit with some risk.  Some even compare prices in-store, which makes managers very apprehensive.  

But there might be more than that.  In recent years, many of the big box stores have suffered through a slump in consumer's purchasing power.  Said consumers might have switched to internet shopping to save money and many have not made the transition back to actual stores.  In addition, many people are working longer hours, with less time for store gazing.  

Although the US economy is on a mild upswing, consumer demands and habits might be changing faster than large retailers can adjust to.  However, the trend is troublesome because it will add to the current crisis in job availability.  Hundreds of closures means thousands of jobs lost, jobs that might not come back to the area.

Source: Reuters/Author: S. Lam