Not-So-Hot Unit Growth
Store closings indicate a retailer could be lopping off its worst performers to remain viable, or they could indicate a problem area has been identified (and excised) so that the core operation can regain health.
It is not always easy to determine which is occurring. Borders Group and Trans World Entertainment are fighting the technology revolution that has seen the popularity of downloading eclipse the sale of traditional music, movies and books in stores. Talbots CEO Trudy Sullivan set about shedding the men’s and children’s clothing divisions and J.Jill, as well as Talbots units in the U.K.
At Pacific Sunwear of California, shifting tastes prompted the company to begin shutting down its urban-inspired d.e.m.o. division in spring 2007. The store closings continued into last year, resulting in a 15.8 percent reduction in chain strength for PacSun. Home goods retailer Kirkland’s continues to fine-tune its store base. After closing a net of 36 stores last year, the company plans on closing another 35 to 40 units in 2009 even as it cuts the ribbon on 15 to 20 new locations.
In an entirely different take on downsizing, Rex Stores is pursuing its corporate strategy of selling off its small-town appliance stores in favor of investing in alternative energy ventures.
