Why thousands more retail stores may have to close

The wrenching changes in the retail industry resulting from the shift of consumer spending online shows no signs of slowing. As shoppers flock to e-commerce sites such as Amazon (AMZN), the result has been a record number of store closures and thousands of job cuts.

A recent Cowen & Co. report predicts that mall-based chains such as Macy’s (M), JCPenney (JCP), Abercombie & Fitch (ANF), Gap (GPS) and Ascena (ASNA) (parent of Lane Bryant, Anne Taylor and Loft stores), may have to trim their store counts by 20 percent or more.
The Cowen estimate would equal about 2,000 locations and is more than the closures retailers have announced but haven’t completed yet. And it would mean about 20 percent of U.S. malls, particularly those in weak markets, will have to be “repurposed” or closed, the report said.
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“Declines in traffic have been a multi-year issue; however, we believe this problem has accelerated and become more volatile given the rise of mobile phone use as well as share gains at Amazon -- and the battle amongst online stores of traditional retailers,” Cowen said. “The consumer is in the catbird seat -- the consumer wants and demands ease, value, and selection. If you do not offer this, the shopper will get this combination somewhere else.”

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