CLEVELAND, Ohio — The company behind popular clothing shops like Ann Taylor and Lane Bryant announced earlier this week that it plans to close hundreds of stores throughout the country, continuing a downward trend that’s gripped conventional retailers in the digital age.
Ascena Retail Group, which also owns chains like Justice, LOFT, Maurices and Catherines, said Monday that it would close between 250 and 650 stores, although it’s unclear if it will shutter any stores in Greater Cleveland. The closures are the result of a revenue slide brought about by greater online competition, Ascena’s CEO said.
Other traditional retail stores have seen their profits dip in the 21st Century. National chains like JC Penny, Kmart, Sears and Macy’s also struggle to adjust to modern shopping habits.
Customers increasingly prefer online marketplaces like Amazon, and websites and apps that let consumers compare prices have put a dent in retailers’ already razor thin profit margins.
Younger customers also show greater concern about where products come from, favoring sustainable and responsibly manufactured products and tilting the pendulum toward fair trade and environmentally responsible brands.
CEO David Jaffe told investors during a recent conference call that Ascena’s stores are not immune to those changes, according to CNN Money.
The company decided to close hundreds of stores because of “persistent traffic decline” thanks to Amazon and other online marketplaces, Jaffe said.
With yet another retail company announcing plans to downsize, we talked to experts and shoppers about the steady slide of retail sales.
The Amazon effect
Online marketplaces appeal to young shoppers like Bethany Halusker, a Parma woman in her 20s, because they save time.
“There’s lots of variety and it’s very convenient since I don’t have to shop around,” she said.
Many online sellers now offer free shipping or are able to get their products to a customer’s door within a few days.
“Two-day shipping helps out a ton,” Halusker said of Amazon, the internet retailer she uses most often.
Halusker said she still buys groceries and most of her clothes at traditional stores, but she goes online for almost everything else.
More and more consumers are following her example.
While internet sales accounted for only around 8 percent of retail sales in 2016, online purchases grew by 15 percent compared to 2015, a significant bump which is enough to affect revenue at brick and mortar stores.
However, even when customers aren’t shopping online, the internet can still impact conventional shops.
In addition to giving customers another shopping outlet, the internet makes it easier to compare prices and find the best deal, said Jack Kleinhenz, chief economist for the National Retail Federation. That depresses the power of retailers to set profitable rates.
“With no pricing power, their margins become thinner,” Kleinhenz said.
Retail sales during the spring months actually rose slightly in 2017 compared to 2016, Kleinhenz said, citing a recently released report on nationwide sales, but he said consumers are likely taking advantage of falling prices.
Many factors contribute to the decline of retail stores, experts said.
“It’s never just one thing,” Kleinhenz said.
However, everyone interviewed for this article agreed that evolving consumer behavior…