These U.S. Retailers Are Completely Failing to Attract Customers
Will future generations shop in real stores with actual cash registers? If the number of hurting U.S. retailers is any indication, the answer is no. Shopping malls and traditional stores have struggled since the arrival of Amazon and other e-commerce sites. But other factors are to blame as well.
Attempts to attract customers are failing miserably for these stores, including one entertainment retailer that’s painfully behind the times (page 9) and another that announced it would close all its U.S. stores (page 12).
Biggest blunder: not utilizing athleisure and sneaker trends in a saturated market
The athleisure and sporting apparel industries are booming to the point of saturation, which gives Nike a lot of competition. The iconic company’s international sales show great promise — sales grew 9% in China — but U.S. sales ranked as 2016’s worst-performing stock. With 40% of sales coming from North America, Nike needs to innovate and adapt, especially with its sneaker brands. Consumers are looking online for alternative shoe and apparel brands.
Next: Online sales are killing this sports-driven retailer.
2. Dick’s Sporting Goods
Biggest blunder: not addressing struggling products
It seems like every sporting goods store is struggling. Dick’s Sporting Goods limped into the third quarter of 2017, with its shares dropping about 23% and it’s projected growth slowing to 1%.
This may not seem too alarming, but Dick’s predicts a bigger plunge in sales even as it increases discounts. According to USA Today, “Sales of hunting goods, licensed products and athletic apparel undermined Dick’s during the period, offsetting growth in footwear, golf and online sales.”
Next: This teen retailer is rethinking its risque reputation.
3. Abercrombie & Fitch
Biggest blunders: not adapting to changing trends and loss of mall traffic
It was once cool to sport the same ripped jeans and popped collars Abercrombie models advertised in every mall nationwide. But like the fashion trend, the store’s brand has fallen by the wayside. Despite its attempts to modernize store layouts and rebrand clothing, profits are way down.
It has been forced to shut down about 60 physical locations in 2017. And some say the company’s website is telling of its failed attempts to remain relevant in the fashion world. Deeply discounted items and outdated clothing are not-so-subtle hints of a near demise.
Next: This brand is going “under.”
4. Under Armour
Biggest blunder: saturated athletic market
Under Armour was once a sportswear heavyweight, but its recent profit margins are less than stellar. The brand has closed more than 50 stores because of dramatically slowing sales. It’s predicting dismal growth of only 9% to 11% for 2017, which is hardly comparable to the success it enjoyed in prior years.
Combine that with the resurgence of other big competitor brands, such as Puma and Adidas, and Under Armour is struggling to compete for consumer preference. Puma’s recent partnerships with younger influencers, including Rihanna and The Weeknd, are also a driving force in Under Armour’s struggle to retain customers.
Next: The reason no one shops at Sears and Kmart
5. Sears and Kmart
Biggest blunder: poor leadership and confusing rewards program
Those accustomed to a Sears or Kmart store full of energetic shoppers looking for a deal now see a desolate parking lot. Today, many Sears and Kmart storefronts — both owned by Sears Holdings — are riddled with giant posters advertising “everything must go” and “all sales final.” The company has already closed approximately 180 Sears and Kmart stores in 2017, with plans to close even more.
But with so few in-demand products available, why would anyone make the trek to a physical location? Sears sold its Craftsman tool business to Stanley Black & Decker and is licensing Kenmore appliances and Diehard auto parts to other retailers.
Next: You’ll have to get your outdoor goods elsewhere.
6. Gander Mountain
Biggest blunder: e-commerce competition
The sporting goods industry is taking a beating from consumers. Gander Mountain’s inability to compete with e-commerce businesses offering the same products for cheaper prompted it to file for bankruptcy in March 2017 and close 32 of its stores. Only time will tell whether customers will return to Gander Mountain for their outdoor shopping needs now that Camping World is the franchise’s new owner.
Next: Why J.C. Penney could affect the future of malls forever
7. J.C. Penney
Biggest blunder: transitioning from coupon savings to “everyday low prices”
It’s no secret department stores have had a rough go when it comes to attracting customers to their physical stores. J.C. Penney was once the cornerstone of mall success. But recently it announced plans to shut down about 140 of its department stores — nearly 14% of the total store base to “effectively compete against the growing threat of online retailers.”
For its remaining stores, it plans to focus on beauty, home refresh, and special sizes rather than innovative shopping experiences and exclusivity.
Next: How many kitchen gadgets can one retailer sell?
8. Bed Bath & Beyond
Biggest blunder: not transitioning to digital sales
Analysts and market experts agree that Bed Bath & Beyond needs to focus on younger shoppers. The home goods store saw its stock fall by almost one-third.
As a once-retail giant, Bed Bath & Beyond’s CEO Steven Temares wants to focus on using retail stores as fulfillment centers, offering services such as “reserving an item online and picking it up in-store, returning an online purchase to a store, or scheduling an appointment online to meet with one of our registry consultants in-store.” Time will tell if Bed Bath & Beyond can progress into the digital age of retail.
Next: This once-booming entertainment store won’t face the facts.
Biggest blunder: not adapting to e-commerce
Physical DVDs and video games are a thing of the past. And GameStop can’t seem to get past the transition to digital sales. Critics point out that Blockbuster faced these exact issues a couple years ago — and look how that turned out. GameStop has shuttered more than 100 stores in 2017, and its stock fell more than 30%. Although the video game retailer likely won’t go bankrupt this year, they must adapt or they’ll face a similar future.
Next: An athletics retailer that blames lack of choices for lack of traffic
Biggest blunder: lack of product versatility
Like Under Armour, athletics retailer Lululemon is poised to post slowing sales growth in 2017. The brand’s CEO Laurent Potdevin blamed the sluggish performance on lack of “depth and color” available for purchase in clothing. But unlike other struggling retailers, Lululemon is pushing forward, opting to open new stores rather than focusing on attracting more customers to existing stores. Whether the risky strategy pays off remains to be seen.
Next: This once-dominant “shack” has seen better days.
Biggest blunder: not acknowledging the importance of online sales
Consumers enjoyed ultimate convenience during RadioShack’s heyday, as nearly 95% of all American households had a store within three miles of their homes. Today, the retailer has succumbed to closing over 1,000 stores, leaving roughly 70 stores to carry the torch for customers who prefer buying electronics in person rather than online.
Next: This retailer was once the “world’s greatest toy store.”
12. Toys R Us
Biggest blunder: not trying to compete with online retailers
Who needs to visit an actual toy store when Amazon can deliver gifts to your door? Most parents seemed to agree, and Toys R Us suffered the consequences. Fearing they wouldn’t receive payment, vendors began canceling shipments after the toy retailer filed for bankruptcy in September 2017. In March 2018, it was reported that the company would close or sell all 800 of its U.S. stores after it was unable to reach a deal to restructure billions of dollars in debt.
Next: An iconic retailer closing an iconic store
13. Ralph Lauren
Biggest blunder: lack of appeal to younger customers
Even high-end brands aren’t immune to the struggles affecting big department stores. It’s a telltale sign of retail doom when even the glitz and glam that cemented Manhattan’s Fifth Avenue into retail royalty struggles to attract shoppers.
Ralph Lauren is the latest retailer to close its trademark New York storefront on Fifth Avenue. Declining sales, failed attempts at modernizing the brand for younger buyers, and jacked up rent prices on the block all contributed to Ralph Lauren’s decision to close the store. It plans to restructure store formats and streamline operations to win back customers and boost sales in the process.
Next: Why Macy’s is still failing to lure more customers to the store
Biggest blunder: failing to adapt to technology and e-commerce
Sales are still lagging Macy’s despite the debut of Macy’s Backstage, pop-up shops offering deeply discounted items. Still, reports say Macy’s has lost sight of what customers really want, allowing Amazon the opportunity to surpass the retailer as the largest supplier of apparel.
Macy’s turnaround strategy includes increasing the number of exclusive items and ramping up its mobile app to improve the in-store shopping experience. And if the Amazon effect isn’t already influencing its rebranding strategy, Macy’s also says it’s working to streamline the process of consumers buying online and picking up in store.
Next: A popular women’s clothing line is on the fence.
15. Ann Taylor (and friends)
Biggest blunder: weak brand identity
Ascena Retail Group — the women’s clothing retailer that owns Ann Taylor, Loft, Dress Barn, Lane Bryant, Justice, and more — is planning to close a large portion of its stores. At least 268 stores will close while the remaining 399 could go under if store rental negotiations fail, according to Clark.com. The business-casual retailers are struggling to attract customers as they combat increased competition from discount stores that sell similar clothing for less.
Next: A popular luxury brand that hopes to win back the hearts of its loyal customers
16. Michael Kors
Biggest blunder: lack of originality in saturated industry
Luxury brand Michael Kors is another retailer struggling to attract customers. It blamed the 2017 profit loss on a difficult retail environment combined with a “product and store experience did not sufficiently engage and excite consumers.” The company views 2018 as a transition year where it will bring heightened focus on store experience and product innovation to support longevity in a bleak retail environment.
Next: A retailer that tried and failed to win back customers
Biggest blunder: saturated shoe industry
Crocs lost nearly $44.5 million in the fourth quarter of 2016. As a result, the retailer announced plans to shut down almost 160 stores by the end of 2018. The quirky shoe brand has attempted to revitalize consumer interest by introducing a new line of shoes, including ballet flats, pumps, and wedges.
Next: A children’s retailer offering one last snub to customers
Biggest blunders: loss of mall traffic and not adapting to competitors
It’s no longer fun and games for children’s retailer Gymboree. It filed for bankruptcy earlier in 2017 and announced 350 store closures, roughly a quarter of its total locations. But if you think you can score one last bargain at one of these stores, just wait. In one last snub to customers, Gymboree noted it will not be accepting certain coupons for additional savings at any of its closing stores.
Next: A shoe store that’s shifting focus
Biggest blunder: lack of e-commerce efforts
Payless was once the go-to destination for discount shoes. But it failed to attract a steady stream of bargain shoppers as online retailers have undercut the competition. Payless plans to close 400 of its weaker stores and file for bankruptcy, so it can invest in areas it believes will deliver growth. It aims to expand into places, such as Latin America, bolster its online presence, and shake up its product offerings.
Next: A mall staple on the verge of breakdown
Biggest blunder: saturated discount retail industry
Claire’s used to be the premier destination for teenage mall rats looking for cheap jewelry and cosmetics. But the rise of online shops has affected its profits immensely. Decreased mall traffic has Claire’s fighting with other discount fashion retailers for consumer loyalty — a battle Claire’s is losing. According to Business Insider, credit consulting firm F&D Reports predicts the retailer could be the next vulnerable company that succumbs to closures if something isn’t done to reroute its downhill trajectory. In March 2018, the company was reportedly planning to file for bankruptcy.
Follow Lauren on Twitter @la_hamer.
Additional reporting by Ali Harrison.