What will it take to get department store chains, including J.C. Penney, Macy's and Sears, performing at sales per square foot levels not seen in a decade or more? The answer, according to new research from Green Street Advisors, is store closures and a lot of them.
Around 800 stores in U.S. malls, roughly one-fifth of total anchor space, would need to be shuttered for the chains to reach the same level of sales productivity achieved in 2006. (Green Street, it should be noted, does not see a particularly rosy future for malls either with estimates that over 15 percent will either be closed or repurposed over the next decade.)
Green Street, as reported by The Wall Street Journal, estimates that sales at department stores averaged about $165 a square foot in 2015, about 24 percent lower than in 2006. Over the same period, department stores reduced their collective footprint around seven percent.
Sears Holdings, which recently announced it was closing an additional 10 Sears locations, would need to shutter 300 locations to get back to its 2006 per square foot levels, according to the real estate research firm.
J.C. Penney, whose CEO, Marvin Ellison, has said that store locations are a key element to the chain's omnichannel strategy, would have to close even more — 320 — to return to the same sales per square foot numbers achieved a decade ago. Sales per square foot at Penney have fallen 37 percent since 2006.
- Department Stores Need to Cull Hundreds of Sites, Study Says - The Wall Street Journal (sub. required)
- Retail Sector Commentary: The State of American Malls - Green Street Advisors
- Sears to Close 78 Stores This Summer - The Associated Press/ABC News
- Why J.C. Penney's CEO Isn't Closing More Stores - Fortune
- What's wrong with department stores? - RetailWire