The Doubtful Future of Big Brick-and-Mortar

The parent company of two US retail chains isn’t sure how long it will stay in business. In fact, it’s only one of many big brick-and-mortar chains facing an uncertain future.

Last week, Sears Holdings, owner of Sears and Kmart, issued its annual financial report.

“Our historical operating results indicate substantial doubt exists related to the company’s ability to continue as a going concern,” the statement reads.

Sears is a bit of an outlier in the big brick-and-mortar reckoning of eCommerce. The company has had its share of unique problems. Because Sears Holdings hasn’t reported profit in seven years, it has been selling off brands and closing stores for more than a decade. The company went from 3,400 US stores in 2006 to 1,400 today.

Now, though the annual report does assert that the business can still turn its fortunes around, its options may be limited.

Do other big brick-and-mortar chains face similar gloom?

Big Brick-and-Mortar Sheds Real Estate

The shift to eCommerce has forced a lot of big brick-and-mortar chains to reduce overhead by shutting down stores. In the US, there is too much real estate. And shoppers prefer eCcommerce to big brick-and-mortar more than ever.

Thus, as Forbes reported recently, 2017 will likely see big chains shed stores like crazy. The magazine estimates that 21 US-companies will shutter 3,591 stores. These include department stores, electronics chains, apparel providers and others. Most will hang on with an omnichannel strategy. But six of those chains will close stores due to bankruptcy.

So What’s Next?

Big retail will survive. But, it won’t be like it was when everyone drove to the mall.

Retailers must get smaller (more on that later this week) and smarter. As Forbes writes, they may need to focus on balance sheets, not profit and loss statements.

If that’s true, the new stage of retail requires companies with retail channels to emphasize the fundamentals of cost control and increased productivity.