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Annual retail store closures are


estimated to reach a 20-year high in 2017, with as many as 7,000 stores closing, according to a report released in May by Silicon Valley-based venture capital firm Kleiner Perkins Caufield & Byers. Anchor department stores such


as Macy’s, Sears and J.C. Penney are collectively shuttering hundreds of stores. More than 60,000 retail jobs were eliminated in just the first quarter. American Apparel filed for bankruptcy and laid off thousands of workers while women’s apparel retailer Bebe closed all of its 168 stores, shifting its remaining business entirely online. Signet Jewelers is closing 170 stores, mainly in malls, while office supply retailer Staples is shutting down 70 stores. At Berkshire Hathaway’s annual


meeting this spring Warren Buffett said that “the department store is online now,” stating his belief that the retail industry will be completely changed within a decade. Meanwhile, retail analysts at Credit Suisse have said that as many as 25 percent of U.S. shopping malls will close by 2022, due to compe- tition from e-commerce. Credit Suisse also estimates that online apparel sales will more than double by 2030, climb- ing to 35 percent of all e-commerce transactions. Nevertheless, Nancy Thomas, CEO


of the Virginia Retail Federation, points out that e-commerce sales still account for less than 10 percent of all retail sales in the nation. “That’s the perception that people need to wipe away from their minds,” Thomas says. “[E-commerce] is gaining ground, but it’s still not what people want to do. They want to come into a brick-and-mortar store. But the brick-and-mortar stores and of course our malls just need to look different.” The latest U.S. Department of


Commerce data puts e-commerce sales at about 8.5 percent of all retail sales, a number that’s been climbing steadily for the last 10 years. “A lot of those we’re seeing [closing]


were struggling retailers to begin with,” says Connie Jordan Nielsen, senior vice president with Richmond-based commercial real estate firm Cushman


Photo courtesy Walmart Nielsen


& Wakefield|Thalhimer. “They weren’t strong enough to survive and then on top of that some retail- ers just haven’t adjusted well to [technology changes].” Perhaps the biggest


testament to the survival of bricks and mortar is the fact that Amazon is aggres- sively moving into the space. In addition to opening a handful of stores across the nation this year, Amazon announced in June its largest-ever acquisition — the $13.7 billion cash purchase of Whole Foods grocery stores. Shares in Kroger and other large grocery retailers (a necessity retail sector considered largely


www.VirginiaBusiness.com


Wal-Mart has begun installing 18-foot self-service pickup towers at many of its stores.


immune to e-commerce disruption), took significant share-price hits on the news.


Envisioning the future So what does the future of physical


retail look like? “Saving customers money but also


saving customers time … is becoming increasingly important,” says Bob Davis, vice president and regional general manager in Virginia for Wal-Mart Stores. One of the new innovations the national retailer will be unveiling in stores this year is an 18-foot-tall, self- service pickup tower for online orders. That way customers “can literally be in and out of the store in moments,” says Davis.


VIRGINIA BUSINESS 91


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