“These things gotta happen every five years or so, ten years. Helps to get rid of the bad blood.” — Pete Clemenza, “The Godfather”
Better buckle your seatbelts. The impact of an overstored landscape and the shopping-habit shift to digital is about to bring about the greatest retail consolidation since the Great Recession.
So far this month at least five national chains have announced store closures and/or layoffs, including Walmart, Macy’s, JCPenney, Sears and Lowe’s.
The latter was the latest to join the retail retrenchment, informing employees this week of a 2,400-person layoff affecting store-level staff, warehouse and customer support managers, and about 10 percent of the VPs at its Mooresville, N.C., headquarters.
According to a notice from CEO Robert Niblock obtained by nearby Charlotte station WSOC-TV, the moves are intended to “shift resources from back-of-the-store activities to customer-facing ones” and to further the home improvement chain’s omni-channel strategy.
“We are all aware of how quickly the retail industry is changing,” Niblock wrote. “Advances in technology and the competitive landscape continue to transform how customers are shopping and their expectations of us. In this environment, it is imperative that Lowe’s continue to evolve …”
The hatchet may also be falling at Walmart, where hundreds of regional and headquarters jobs, including HR positions, are expected to be cut by month’s end, The Wall Street Journal reported. “We are always looking for ways to operate more efficiently and effectively,” a spokesperson said, without confirming or denying the newspaper’s story.
Walmart did acknowledge a 7,000-worker housecleaning in September, as store-level accounting and invoicing positions were either consolidated or replaced by automation.
Macy’s similarly announced a 6,200-employee bloodbath this month that would “eliminate layers of management” and cut 3,900 sales associates, as the department store shutters 68 of its 730 locations this year and shifts more resources to digital.
“We continue to experience declining traffic in our stores where the majority of our business is still transacted,” noted chairman/CEO Terry Lundgren. “Our omnichannel strategies continue to evolve based on the changes in our customers’ shopping behaviors, including a focus on buy online, pickup in store and mobile-enabled shopping.”
Store closures are also afoot for Sears Holdings and JCPenney. Sears, which has been steadily selling, subleasing or shuttering its real estate, confirmed this month that it would close an additional 150 stores, consisting of 108 Kmart and 42 Sears locations that together generated an adjusted EBITDA loss of about $60 million last year.
As for Penney, which found recent success in a return to major appliances, chairman/CEO Marv Ellison suggested that closures of some of its “smaller-market locations” are coming soon, the Dallas Morning News reported. “We’re going through an analysis now,” Ellison told a real estate conference. “We have certain locations that we readily admit we have to downsize.”
That led Cowen and Company retail analyst Oliver Chen to project a 30-percent cut in its store base, which would eliminate 300 of its approximately 1,000 stores, CNBC said.