If you live in a major city, you might have noticed fewer Nordstrom, Target, and Starbucks locations. But why are these big chains closing where there is the highest concentration of customers? The answer may surprise you…
Online Shopping’s Role in Big Chains Closing
After the pandemic, your first instinct as to why all these big chains are closing everywhere is online shopping. And some data supports that theory…
A CNN Business article reported that in New York City there is a direct link between stores closing that sell items most purchased online.
Items on that list include:
- Clothing
- Accessories
- Vitamins
- And, electronics
But to entirely blame e-commerce’s role in this retail apocalypse is only part of the story…
“We don’t need that!”
At the same time that consumers are going online to buy particular items, they are spending less in general.
As the cost of living rises — especially in metropolitan areas — the public is more concerned about paying bills and rent than shopping.
In major cities such as San Francisco and Los Angeles, the cost to rent per square foot can be double or more than the national average.
Of course, those steep rental costs don’t just apply to housing.
Box Stores Aren’t Making The Rent Either
Another major obstacle to big chains keeping their doors from closing is the rent prices on their MASSIVE retail spaces.
David Dixon, an urban places fellow at Stantec, a global design firm, said this about the large chain business model…
“THE LOGIC OF BIG BOX RETAIL, PERIOD, IS MUCH WEAKER THAN IT WAS 20 YEARS AGO OR EVEN 10 YEARS AGO.”
So, yes, changes due to COVID, consumer spending practices, and the cost of real estate are changing the landscape of big-city retail.
Nonetheless, all of this has been a long time coming…
Big Chains Closing is Nothing New…
For years, experts and the media have been predicting the downfall of brick-and-mortar chains. This video from over a decade ago echoes the same sentiments as today.
Not only that, research from JPMorgan Chase shows that this has been a trend since 2017!
Based on all of this, big chains will continue closing in metropolitan areas unless they adapt to the rapid changes in the marketplace…
Adapt and Be Great,
— GCTV Staff
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