NEWPORT BEACH, CA—Sears is continuing to close stores, and it’s having an impact on retail centers nationwide. The Orange County Register reported in late July that the Segerstrom family has bought out the owners of the Sears store at South Coast Plaza in Costa Mesa, CA., from Sears Holdings Corp., operators of the Sears and Kmart chains. For now, Sears will still run the store, but as a mall tenant.
To get a retail expert’s take on the move and what the Sears saga means for the retail real estate sector, GlobeSt.com spoke with SRS Real Estate Partners’ leadership Matt Mousavi and Patrick Luther about how they see this playing out.
According to the SRS executives, Sears Holdings continues to close stores at a rapid pace, with 43 stores set to be closed within the next few months, comprising 30 Kmart locations and eight Sears locations. In total, this brings the store closure count for 2017 to more than 300. “As the impacts of e-commerce and the reality of slower foot traffic sets in with big-box retailers like Sears, we expect to see continued store closures in this space as retailers optimize their store counts and downsize footprints,” say Mousavi and Luther.
However, while e-commerce is thriving, overall retail sales are thriving as well and growing, the pair points out. The narrative should not be that brick-and-mortar retail is going away, they say, but rather about the evolution of retail that is taking place, and in that context, the retail industry is doing quite well. They point to recent statistics published by the US Census Bureau and the US Department of Commerce that show total annual retail sales growth was up approximately 5% from $1.189 billion in Q1 2016 to $1.25 billion in Q1 2017. In-store sales grew by 4.3%, from $1.097 billion to $1.144 billion, with brick-and-mortar sales representing approximately 91.5% of all retail sales. Not surprisingly, they say, online sales grew by more than 14.7% from last year, making it clear that retailers must continue to improve customer experience and attract consumers by offering a more enjoyable and exciting environment, one that is complimentary to online retail.