A massive number of retail stores have closed in 2017, an even more devastating number of store closings is expected in 2018. What’s alarming is that these are not just the typical brick and mortar shops that are closing down, even retail giants such as Walgreens, Gap, and Gymboree have publicised their intent to close down more than 3,000 shops this year. Adding to this, S&P Global Market Intelligence, expects large companies such as Sears, Bon-Ton, Bebe, Destination Maternity Corp., and Stein Mart to file for bankruptcy within the next year.
These closings are making the commercial real estate owners shake in their boots. These retail giants used to push traffic into their malls, therefore, making the other stores around them profitable. If these stores were to close, the shopper traffic throughout the entire mall would be affected. Smaller shops would then be able to negotiate better terms for their stores. While this situation is good for retailers, mall owners would feel the brunt of the closings through lower rental income and less than favorable deals.
The desperation of the mall operators is displayed through their actions. They have begun suing retail stores in order to keep the retail chains operational. Starbucks, for example, has been sued by Simon Property Group to keep their 77 Teavana chains open for business in their properties across the United States arguing that foot traffic to surrounding stores would be affected if the chains were to close down so abruptly.
However, this is not true for all retailers. Others have been slowly gaining from the meltdown. Discounters have been growing their physical assets at the expense of others. Hundreds of new stores are slated to be opened next year for the Dollar General, Dollar Tree, Lidl, Aldi, Ross, and TJ Maxx.
