Retail Store Closures

Investment Analysis Clubs Macro Economic Trends and Risks
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Walgreens said Thursday that it plans to close a “significant” number of its roughly 8,600 stores in the United States. Around 25% of Walgreens’ stores aren’t profitable

CVS, the largest US chain, closed 244 stores between 2018 and 2020. In 2021, it announced plans to close 900 stores. And Rite Aid filed for bankruptcy last year and will close up to 500 stores.

Dollar General’s growth has also hurt drug store chains in rural areas.

https://www.msn.com/en-us/money/companies/walmart-suddenly-closing-more-stores-in-2024/ar-BB1oP5pn
Walmart suddenly closing more stores in 2024

Budget retailers Dollar Tree and Family Dollar (DLTR) announced they would shutter approximately 1,000 locations in 2024 among deteriorating economic conditions.

Shop lifting is a bigger problem now in the retail market space.
Many retailer have left downtown areas in major cities such as Portland & San Francisco.

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Here’s what I got from it. To wit:

Nothing to see here. The talk about abandoning communities and leaving people without access to this that or whatever = journalists stirring up stuff. The facts on the street (i.e. what they should have been writing about) are and were the following: The business to justify the building of all those units was never there in the first place. Ergo: They never should have built them. They proved a point and are now making the adjustments. On a higher economic level: The “Build it and they will come” school of economics (supply side…?) has its limits

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Well retailers are abandoning downtown areas in major cities.
And the expansion did likely kill off independent businesses in surrounding small towns around major cities where many fixed income folks live due to lower real estate prices.
Large corporations are now likely closing stores in these areas as inflation is cutting the amount the fixed income folks can spend.
Mark Cuban has moved into mail order pharmacy business:https://costplusdrugs.com/
Mail order and online presence cuts into retail store business. A couple of years ago Bezos closed his amazon retail stores.
And likely that is the reason for a major pull back.
Mail order drug business now is larger than big box pharmacy.

There was a consolidation of pharmacies 2010 to 2020. CVS bought Target pharmacies and WalMart bought Rite Aid stores. So the reduction of duplicate stores and stores with low volume has begun.

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It’s amazing how many “JCs” think all they need to to to grow their company is build more stores, to infinity. RS thought that. Office Depot thought that. I remember the store manager at OD telling us that the company can build a store two miles down the road from an existing OD, and they both do OK. The $30M/year JCs never seem to grasp that all they are doing is increasing overhead, a lot, for a small sales gain. Sort of the reverse of auto industry “JCs” now, that think all they need to do is increase ATP and GP to infinity, to make up for their decades long loss of market share. I am sure there are some really sharp CEOs, who are grounded in reality. I just never met one.

Steve

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Well, there have been some changes in the cities over the last few years. Remember the ‘new normal’? Lots of people have moved. Commercial real estate in many areas is also hurting.

DB2

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In general, a business (a store, an outlet, etc) cannot exist unless it produces a profit sufficient to make the investment worthwhile. It’s like the law of gravity, you can’t escape it. Therefore any stores where the costs rise too high to reach this hurdle will eventually close.

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Rural communities have suffered from store closures (and medical services) forever. Rural communities don’t have mass transit options to take them to the nearest store either. And yet rural communities continue to exist. So will the cities.

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They have left, but not due to shoplifting.

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Well certainly not solely due to shop lifting but it is a factor.
Fred Meyer that is a regional WalMart type store still has many stores in Portland Or.

WalMart shuttered its 2 stores in Portland but still has stores surrounding the Portland area.

REI & Nike specifically cited theft as a reason for closing its Portland stores.

https://www.kgw.com/article/money/business/portland-stores-retail-businesses-closed-shut-down/283-7dd2f41d-2b36-4435-aed8-7360395a1bf6
This week, Target announced that it will close three of its Portland locations, citing losses from shoplifting and more organized forms of theft. These stores join a wave of post-pandemic retail closures in Portland — and while not all of these companies indicated that theft was the main reason for closing up shop, it’s a trend that city leaders are desperate to reverse.

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The same communities underserved by grocery stores will be underserved again.

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Mail order drug stores are a great option for prescriptions that need to be taken on a routine basis. They don’t work well for acute problems. If you need an antibiotic, do you really want to wait a day or three to start taking it?

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That’s what they said. Here’s another explanation: Blaming theft is a way for the C-suite to cover up their bumbling missteps while collecting amazing amounts of compensation.

REI is a dumpster fire. It used to be that any member (REI is a co-op and is owned by its members) could run for the REI board and collect a modest stipend. Current CEO Eric Artz “professionalized” the board in 2019 and now the board selects the candidates, who of course require appropriate compensation. For 22 years in a row, REI was on Fortune’s 100 Best Companies to Work For. That went out the window as Artz focused on laying off current employees in favor of part-timers, out-sourcing customer service, and closing stores in proactive union-busting efforts.

REI was founded in 1938 by a group of friends to import climbing equipment from Europe, and traditionally catered to the serious outdoor adventurer, specializing in hard-to-find higher-end gear at reasonable prices. But Artz learned in business school that it is smart to decrease SKU count and sell more expensive stuff. So REI shifted towards fashion and high-end boutique gear, like camera equipment and e-Bikes, which caused loyal customers to start shopping elsewhere for the gear they needed. REI has always sold higher-end gear, but went to the extreme high end on their product lines. For example, the sales floor is stocked with Yeti-branded coolers and accessories. Something that would have been unthinkable even 10 years ago.

The best reason to shop at REI historically were the Green Vests, the dedicated employees who were serious, experienced outdoor enthusiasts who loved talking about gear. “I like this camp stove. It worked great on my solo winter ascent of Mt. Adams last year.” But Artz is a business school graduate, so he likes metrics. You can’t measure dedication or passion. You can measure how many memberships the Green Vests sell each work period and the number of credit card signups they get. Shopping at REI become torture for both the customers and the staff. The employees say straight up they don’t like working there anymore and many of the knowledgeable ones have simply moved on.

So it is possible the store was closed for theft. Or it could be the CEO is a greedy, bumbling, blanker, who can’t admit he’s destroying an iconic American brand.

Bonus link: Target says they were forced to close stores due to theft. However, the data don’t really back that up.

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I had an REI membership from 1959, when I was 8 (mail order from Seattle to Los Angeles), and at a guess 85% of my current mountaineering gear, from climbing pitons and nuts through stove, sleeping bag and tents, are REI.

I dropped my membership a decade ago, and my last visit to a physical shop five years ago was dismal and my last.

d fb

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Yep

In 2002 at a local gas station they promoted a new manager. He raised the price on a bottle of soda by 25 cents.

The following week coke went up 25 cents per bottle.

That is hell on the working capital.

At this point the crisis is over.

The Liberals have beat inflation down. All I care about.

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Saw this on Reddit today. Perfect example of what I am talking about. It gladdens my cold, black heart that there are still dedicated professionals at REI that love helping customers and sharing their knowledge. Hopefully the suits will figure this out.

Today was my favorite kind of day as a Greenvest working at REI. It had it all.

It started with a young woman who needed help with a rain coat who was hiking the PNW… She needed a sleep system as well. We spent close to 30 minutes talking about what her experience was with her current gear and how she might make changes in philosophy of what to carry. She bought the rain coat and then I gave her some homework on sleep systems. Her mom was so impressed that she too, bought a few items including a liner for her daughter…

The next customer came in to compare coolers from a few other companies and we talked through the pros and cons of YETI and he ordered a color with did not have in store. He was convinced he wanted some brand that he had seen somewhere else, but his wife kept saying, you need to buy from here… They both kept asking me why I did not get commission and tried to tip me on their way out the door.

There were a bunch of pack fits and regular “point in the direction of”, mixed in with some front line where I was having a miserable day for member conversion… I was 2-4 Before lunch.

We had a meeting with the SM about how the store was running… I know he gave some sort of term for these quarterly meetings, but the conversation was excellent and we all got to air out some frustrations with the new SOP in each department.

Then the day got juicy… Sold a few bikes, then started on a family of 6 going to the Grand Canyon. They needed everything and price was no object. They had a list, but we kept going through that list and talking about the wisdom of some of it. Given how they had structured their trip we eliminated about half, but added a lot more. I think they spent over 4k and a lot of it was because they trusted us and listened to our advice… Part way through, I had to break off to help in other parts of the store and I sold two boats and two Dometic coolers…

I ended the day 5-7 at the register for the member sales, that was not counting the other new members who signed up because of me… I turned down numerous tips, I stopped counting handshakes at a dozen. I was so busy, that I barely helped with the truck…

We love our customers… two or three of my regulars stop in a day to just say hi or to show me pictures or tell me how the things I helped them with went… One of my new favorites picked up a boat order while I was ringing someone up. He and his woman had been in a few weeks prior and I ordered it for them. He waited around to thank me… I can’t wait to hear about their adventures.

Sure there were a few strange encounters today, but the wins totally outweighed the weird.

If you are a customer… thank you… if you are a fellow Greenvest… I hope you have one of these days the next time you work.

https://www.reddit.com/r/REI/comments/1du42f2/today_was_one_of_those_days/

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