Hundreds of department stores will have to close if companies want to get back to normal revenues, according to a new report.
A year ago Green Street Advisors predicted that around 800 stores would likely need to close, but now the research firm said the number has risen as mall operators grapple with flagging sales and growing competition from online retail.
“Just a year later, the 800 number looks much too light on a strict sales productivity standpoint and is much lower than what will ultimately be needed as the industry will likely need to massively rationalize its store count as it reinvents its business model,” the firm said, according to the Wall Street Journal.
Department store operators Macy’s, Kohl’s, J.C. Penney and Hudson’s Bay all reported falling sales in the first quarter.
A broader decline in brick-and-mortar retail revenues is hitting Manhattan landlords hard, with availability rates in some prime markets like Times Square and Fifth Avenue near Bryant Park hovering close to 30 percent in the first quarter, according to Cushman & Wakefield.
Earlier this year J.C. Penney said it would close 138 stores, while Macy’s previously said it plans to shutter 100.
(To view retail leases by department stores, check out our Deal Sheet)