[1/24/17] While the Great Recession halted the unsustainable expansion of retail space that steadily diluted retailers’ sales per square foot averages, the U.S. remains overstored and oversaturated by retail. The billion square feet of retail space that CoStar Group contends must go is on top of some 5,000 stores that have closed in the past 18 months (about 50 million square feet of space), according to Clarion Partners.
“Simply put, it all comes down to productivity,” Suzanne Mulvee, director of U.S. research, retail for CoStar Portfolio Strategy, said in the report. “Retailers on average are generating fewer sales per square foot than they did during the decade leading up to the recession.”
The list of store closings these days is long. Macy’s has begun to correct its own over-expansion and is closing about 100 stores nationwide; some experts believe that’s just the tip of the iceberg for the retailer. Wal-Mart Stores has pulled back on its store expansion plans in favor of dedicating resources to e-commerce. And The Limited, once a ubiquitous mall tenant, shuttered all stores earlier this year in preparation for a bankruptcy filing.
But while the over-expansion of stores and the rise of e-commerce are frequently blamed for creating the predicament that many retailers find themselves in, shopping mall landlords and retailers should be wary of using old methods of calculating productivity in the omnichannel age, according to Hongwei Liu, co-founder and CEO of wayfinding technology firm Mappedin.