Magazine article Drug Topics

Store Closings Reflect Repositioning of Retailing

Magazine article Drug Topics

Store Closings Reflect Repositioning of Retailing

Article excerpt

Store consolidation--a polite way to describe store closings--will continue, predict Coopers & Lybrand and G. A. Wright Inc. In fact, some industry observers estimate that there will be at least 50 fewer retailers by the end of the decade than there are now, according to a recent report released by these firms.

In order to study the implications of this reduction, Coopers & Lybrand, an international professional services company based in New York City, and G. A. Wright Inc., a consulting and marketin firm headquartered in Denver, interviewed representative retailers in each of the following industry segments: department stores, discount stores, specialty softgoods chains, specialty hardlines chains drugstores, convenience stores and supermarkets.

For ease of comparison, the results are grouped into two broad segments: general merchandise, oriented retailers and food retail. ers (this segment includes drugstores). Some 69% of retailers interviewed are selling general merchandise, while the remaining 31 are supermarkets, conveniene stores, and drugstores. In total, these respondents currently operate 12,000 stores, the report said.

Approximately 82% of general merchants and 62% of food store retailers participating in the study had closed stores in 1991 or were expecting to do so in 1992. In the future, 18% of the general merchandise group and 38% of food retailers who participated in the survey expect to close some stores.

Retailers that closed stores in '91 said not all the stores they closed were necessarily performing at a loss, although most were. Factors influencing decisions to close stores included changing demographics and new competitive forces. Lease renewals were also cited as a factor; as more leases come up for renewal, so does the opportunity to relocate to new sites.

During 1991-1992, the number of stores closed by general merchandise retailers participating in this study ranged from a single unit to as many as 900. The high number of store closings reflects the major repositioning taking place in American retailing today. For some retailers this has included closing an entire corporate division.

Without these actions, more retail bankruptcies would likely take place, said the study. According to the survey, bankruptcy filings prompted store closings by several participants.

On the plus side, less beleaguered retailers viewed store closings as a way of strengthening their businesses. For instance, one chain reported closing 67 stores last year, but said "this was the result of relocating to what we viewed as stronger locations, rather than any downsizing of our business."

In the food retailing sector, 62% of retailers had closed stores in '91 or planned to do so in '92. …

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