Saturday, January 7, 2017

Department Stores in Trouble

Macy's and Sears made big announcements of closings and downsizing this week.

I remember just last year Macy's closed and then bulldozed its store at the Spectrum in Irvine. They closed dozens of stores nationwide back then, and now they're doing another round.

I rarely shop at department stores anymore. Every now and then I think about South Coast Plaza, which is a mall built around about a half dozen major department stores, including high stores like Saks Fifth Avenue. Sometimes I wonder how they're still in business over there. I guess they'll just bulldoze some stores when the time comes.

In any case, at USA Today, "Department stores become endangered as Sears, Macy's struggle":
Sears is  closing  150 stores and selling its vaunted Craftsman tool brand, but those steps may not be enough to stop the unraveling of the American icon.

With Sears' announcement Thursday coming only a day after rival Macy's saying it would close 68 locations, the department store concept itself is looking like an endangered species. In a retail landscape now dominated by online sellers like Amazon and big-box chains like Walmart and Home Depot, Sears finds itself in a search for a reason to exist.

"The brand has lost relevance,  it’s lost customers and it’s lost its real reason for existence on the American retail scene,'' says Neil Saunders, CEO of Conlumino, a retail consulting firm. Following "the trajectory they're on, there are no real signs of them turning it around to profitability.''

Sears has more than 1,300 stores remaining in its portfolio, so its demise could be prolonged. But if the retailer is unable to stem its financial bleeding and is forced into bankruptcy or perhaps a final assets sale, its loss would be akin to that of dominating American companies like airline Pan Am or five-and dime F.W. Woolworth.

"I honestly don’t see a spot for Sears long-term," says Van Conway, CEO of Van Conway & Partners, who has advised retail companies and other businesses on reorganization and insolvency. "My mom shopped at Sears. That was the only place she could go. Now you have 50 choices, and Sears is outdated.’’

Founded in 1886, Sears launched its first large, general catalog a decade later and for generations was the go-to source for products ranging from watches to washing machines. Though it lost its place as the nation's biggest retailer to Walmart in the 1990s, Sears enjoyed a renaissance during that decade under the helm of then-CEO Arthur Martinez, who pushed a greater focus on apparel sales and other initiatives.

The company faltered in the 2000s, selling its more than $30 billion credit portfolio to Citibank in  2003 and merging the Sears brand with Kmart, another struggling big box chain...