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Large Retailers Are Closing Many Of Their Stores
huffingtonpost.com 24/7 Wall St.: Brick-and-mortar retailers have been suffering from slow economic activity for years, as well as from increased competition from online retailers. The rise in store closings is a prominent sign of their struggles. Weakened companies cannot afford the real estate and personnel costs that go along with supporting hundreds of unprofitable locations. The clearest proof of the problem was Radio Shack’s recent decision to close more than 1,000 stores. Radio Shack is hardly alone. During that last several years Gap has closed 20% of its locations. Even Macy’s, which has forecast strong earnings and is considered the most successful of the mid-market retailers, closed stores recently. A number of factors can lead companies to close stores. One is mergers and acquisitions activity. As organizations join forces under a single umbrella, locations that once competed for sales can become redundant, leading to store closings. The most recent example of this is the marriage of Office Depot and OfficeMax, completed late last year. Management has made it plain that the merger would produce cost savings by consolidating jobs and closing stores. The pressures businesses face from the growth of online retail is another factor that can contribute to store closings. In particular, the rise of Amazon.com, America’s largest e-commerce operation, has turned the entire retail industry on its head. Bookseller Barnes & Noble was one of the first companies to be threatened by Amazon.com, which originally began its operations as an online bookstore. Online retailers, Amazon.com cheif among them, accounted for 44% of book sales in 2012 according to Bowker, a bookseller consultancy. Many of these sales came at Barnes & Noble’s expense, as the company’s own e-book business has languished. Staples is a more recent example of a company pressured by Amazon.com. Following two years of sales declines, the office supply retailer announced that it will close 225 stores by 2015, 12% of it’s total store count. to read more: huffingtonpost.com
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