Many stores are closing, but there were too many in the first place.
Recent news of store closings spanning all segments of retail should come as no surprise; as consumers scale back on their expenses, so then must retailers scale back on their own. To that end, the International Council of Shopping Centers estimates that 5,770 stores will close in 2008, compared with 4,603 store closings in 2007.
Because the last decade has seen new store openings at a fervent pace, it has become necessary in this economy to close stores. Unfortunately, high-profile store closings and cutbacks to growth forecasts require retailers to suffer PR drama and weaker consumer confidence. While the mounting reports of store closures are concerning and painful, there are important lessons to be learned from the circumstances leading up to this point.
Invest In Stores, Not Real Estate
You might look at the increase in store closings as an economically forced macro market correction. The best retailers are continually engaged in micro market correction in good times and bad — they invest in high-performance stores and cut losses by eliminating underperforming ones. Those who have done that well aren't among the day's negative newsmakers. By investing in store systems and improving the customer experience in their good stores, and by limiting the wanton rush for the next suburban corner on which to build a store, they've protected themselves from having to take drastic measures in tough times.
As we inch toward an economic rebound, learn from the actions of your peers. By making your best stores excellent destinations, as opposed to diluting your impact by building average stores on every corner, you will reap rewards in the form of business sustainability in virtually any economic climate. You create excellent destinations by outfitting high-performance stores with great customer-facing technologies, which are quite often efficiency-enablers as well.
This Annual Resource Guide To Retail Solutions provides a look at some smart retailers and an insight into smart retailing solutions. You'll read about how Anna's Linens and the NestlÃ© brand improved store-level service by implementing a WAN and a CRM (customer relationship management) program, respectively, and you'll see how a regional grocer saved big money on POS maintenance costs by upgrading store hardware. You'll also find plenty of product information from the industry's leading retail solutions vendors.