The Overstoring of America
Posted on July 27, 2009
A new wave of retail store closings is expected as the recession drags on. Part of the problem is the "overstoring" of America. Supply of retail store space has far outstripped demand over the past decade. Retailers expanded during times of easy credit and are now having to vigorously trim back in order to align supply with falling consumer demand.
CoStar Group says that there is now 46.6 square feet of retail space for every man, woman and child in the U.S. That is 14.2% more retail space in the country than existed in 1990.
WWD reported on how the large growth of consumer shopping space is now coming to an end as it faces a reduction in spending and a move to online shopping.
But the days of unfettered expansion are over. Per capita retail space is down slightly from a year ago, the first decline since 2000. And the pullback is expected to continue. As of April, retailers were on track to close 4,600 doors this year, according to a report from the International Council of Shopping Centers. That's on top of 6,913 closures last year.
The pullback means massive job cuts and layoffs are yet to come, as the retail industry does its best to stay afloat during the global recession.
Update: Overstoring continued despite the recession. A new CoStar report indicates the U.S. shopping center increased to nearly 105,000 centers last year. However the growth in total leasable area was small growing from 7,232 million square feet to 7,236 million square feet over the past year.