What’s Behind Retail Store Closings?

Retail Store Closing


by Bonnie McEwan  

Out of the Malls and Onto the Internet

Most of us who follow the retail industry are aware of the wave of store closings that has taken place over the last few years. Since closings occur intermittently, however, you may not realize that roughly 5,759 stores in the US have shuttered since 2012. These include apparel companies like Jones Group and The Gap, restaurants (Wendy’s, Qdoba, Applebee’s), home furnishing stores (Kirkland, Pier One) groceries (Food Lion, Kroger, Stop ‘n Shop), toy and entertainment outfits (Build-A Bear, Game Stop) and tech companies (Cellular One, Apple). You can find an alphabetical list of all US retail store closings through September 25, 2013 here.

Certainly the Great Recession has something to do with this, but that doesn’t account for the fact that many of the same companies closing brick-and-mortar stores are expanding their online operations. These moves to the Internet have dramatic consequences that reach well beyond employees and consumers to affect communities and related industries, and not in good ways.

Shopping Malls

The obvious example is shopping malls. Most real estate professionals acknowledge that vacancy rates are high in many malls across the country and rents are depressed. Green Street Advisors, an analysis firm that tracks commercial real estate funds, predicts that 10% of the 1,000 largest malls in the U.S. will fail within the next 10 years. Some mall CEOs think that’s a conservative figure.

There’s a website called Dead Malls that tracks those shopping centers that are already abandoned or well on their way. Of the 33 JC Penney stores slated for closing, three are on the Dead Malls site: Muscatine Mall in Muscatine, Iowa, Military Circle Mall in Norfolk, Virginia, and Singing River Mall in Gautier, Mississippi. Macy’s plans to close stores in two more: Fiesta Mall in Mesa, Arizona, and Medley Center in Irondequoit, New York. Abercrombie & Fitch is closing a store in yet another mall on the endangered list, Oaks Mall in Gainesville, Florida.

It appears that these particular malls, along with most of the others listed, while not going gentle into that good night, they are slouching toward oblivion, dragging community spirits down with them. Part of their woes are caused by the oversupply of mall real estate. The US has so many malls that when one closes shoppers can easily drive 10 or 20 miles to another. Add to this the ‘smart growth’ and walkable cities emphases in current urban planning theory and you easily see that the curtain is descending on the malls’ last act.

Malls Repurposed

So what happens to these dinosaurs littering the suburban landscape, becoming eyesores in the communities they once served? Sometimes mall owners just call in the demolition equipment. Occasionally, though, more creative solutions are devised. Although not located in a mall, an abandoned Wal-Mart in McAllen, Texas was turned into the largest, single-story library in the country by Minneapolis-based architects Meyer, Scherer & Rockcastle, Ltd. The conversion plan included space to establish a community gathering place, which serves as an updated version of the town square.

Wal-Mart, once roundly criticized for letting its abandoned stores lie empty to prevent competitors from moving in, now has a subsidiary called Wal-Mart Realty. According to its website, “Walmart Realty’s mission is to find businesses to open in our former stores and clubs and to locate in available property around our stores. At Walmart Realty, we believe we have a responsibility to work with communities to find a use that generates economic growth and opportunity.”

Online Rising

While this is a positive development, it assumes that there are companies interested in opening brick-and-mortar stores, a debatable idea. “If I were thinking of starting a new retail brand right now, I would unquestionably start it online,” writes Jeff Jordan, a partner at Andreessen Horowitz and board member for several online retailers. He points out that online retail will continue to steal business from brick-and-mortar stores and that will place even greater pressure on shopping malls.

Even online retailers that do move offline to open physical stores are doing them as Internet showrooms, where customers view samples and then place orders. This is a stark departure from the traditional retailer that stocks inventory in its stores. Jordan cites two, Bonobos and Warby Parker, that began online and are now employing this showroom model.

There’s a joke going around that says Best Buy, which recently closed 10 stores, has become a showroom for amazon.com. Consumers visit Best Buy, check out the product they’re considering, then go home and order* their preferred model online. I’ll admit that I’m guilty of doing this exact thing when shopping for a high-definition television, not because Amazon had a cheaper price, but because the delivery is so much less hassle than dragging a TV home myself. It’s small conveniences like this — and probably others that are less apparent — that are driving consumers online.

All this does not mean that the retail industry is in trouble. Only that the mechanics of selling are changing. As Bette Davis said, “Fasten your seat belts. It’s going to be a bumpy night.”

*Or order then and there from their Smart phone.

About Gevril Group

Gevril GroupWatchmaker and wholesale watch distributor Gevril Group is the exclusive U.S. agent for exquisitely designed and crafted European luxury and fashion watch brands, distributing and servicing some of the best affordable luxury, Swiss and fashion watches. Gevril Group also operates a full-service watch repair, staffed by master Swiss watchmakers. Contact Gevril Group by email or by calling 845-425-9882.

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The Importance of Mobile Commerce for Retailers

Shopping on a Smartphone


by Bonnie McEwan  

Retail is Going Mobile

The latest trend in retailing is m-commerce, in which the ‘m’ stands for mobile. Increasingly, customers are making purchases directly from smart phones. According to Forrester Research, retail sales made on smart phones reached $8 billion in 2012, comprising 3% of total e-commerce sales. For 2013, Forrester predicts that smart phone sales will rise to $12 billion (5% of total e-commerce) and in 2014 $17 billion (6% of total e-commerce). By 2017, m-commerce is expected to account for $31 billion, about 9% of the entire e-commerce market.

Why is Mobile Going Global?

These m-commerce customers told the survey firm comScore that they buy with their smart phones for a variety of reasons. The top four were:

  • On-the-go convenience, cited by 63% of respondents
  • To get special offers and coupons — 52% of respondents
  • Ease of comparing prices to find best deal — 48% of respondents
  • Product was not found in a brick and mortar store — 41% of resondents

What Retailers Can Do About It

This preference for m-commerce has some significant implications for retailers:

  1. You must be sure that your website — in this situation, referred to as a mobile site — is optimized for the small screen, whose average size is about 2.5 x 3 inches.
  2. You should also offer free ‘apps’ — short for applications — for all the major smart phone operating systems. [An app is a small piece of software that is downloaded to a mobile device to facilitate online activities.] Pay special attention to developing a good app for Apple’s iOS, since iPhone owners do substantially more mobile shopping than owners of other brands.
  3. You may also want to investigate selling watches and other products via a virtual store within one or both of the two most heavily trafficked m-commerce sites, eBay and Amazon. Consider this: eBay receives 6,400 unique monthly visitors, each of whom visits the site an average of 7.5 times for an average of 10 minutes per visit. Amazon is close behind, with 5,824 unique monthly visitors, each of whom visits an average of 5.6 times per month and remains on the site for about10 minutes. Some major retailers sell on these sites, including Target on Amazon and Brookstone on eBay.
  4. If you sell retail from temporary locations, such as outdoor kiosks, pop-up stores or Christmas village shops, there are m-commerce products for your smart phone that make selling more convenient. For example, a company called Square makes a small device that attaches to your smart phone and enables it to take credit cards. There’s no need for card machines or electrical access. Just slide the customer’s card through the Square device. It will record the sale, send an electronic receipt to the customer’s phone and that’s it.


An interesting mobile development for watch retailers is the budding popularity of smart watches, which are predicted to be big for 2013 holiday gift-giving. Several brands are already on the market, although there aren’t many apps available at this point. You can read all about the new smart watches at SmartWatchNews.org, and perhaps be one of the first retailers to create an app for these novel devices. (Very Dick Tracy.)

About Gevril Group

Gevril GroupGevril Group is the exclusive US representative for select European watch brands, distributing and servicing luxury, fashion and sports timepieces at a wide range of price points. Gevril Group also operates a full-service watch repair department staffed by master Swiss watchmakers. Contact Gevril Group by email or by calling 845-425-9882.

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US Postal Service and Amazon Team Up to Inaugurate Sunday Deliveries

Amazon Delivery


by John Sealander  

Amazon Makes Two-Day Deliveries a 24/7 Promise

AmazonFor the first time ever, the world’s largest Internet retailer will now be delivering orders on Sunday. In an unprecedented partnership with the US Postal Service, Amazon.com has started offering its online customers Sunday deliveries in select US markets. The new Sunday delivery service has already arrived in New York and Los Angeles, and Amazon plans to expand it to a large portion of the US population in 2014, including Dallas, Houston, New Orleans and Phoenix.

Members of Amazon’s popular Prime Service will pay nothing extra for this new delivery option. They can now buy products on Friday and get Sunday delivery for free. Non-Prime members can also take advantage of free Sunday delivery on orders of at least $35.

Saving the US Postal Service?

This innovative partnership with Amazon is a welcome new source of revenue for the financially struggling US Postal Service. The fastest growing segment of our business is the package business,” Postmaster General Patrick Donahoe said. “The future of package delivery is a seven-day-a-week schedule. We’ve got the capacity to do it.”

Could private companies like Amazon help the US Postal Service become profitable again? It’s entirely possible. The postal service already expects to deliver 420 million packages this holiday season. This represents a 12% increase over last year, and the new partnership with Amazon could significantly increase these numbers.

Amazon Getting Even Quicker

Amazon is committed to service. It has been spending billions of dollars building new warehouses around the world so it can deliver products more quickly. By offering seven-day-a-week deliveries, they can keep these sophisticated warehouses working for customers on a 24/7 basis, becoming even more productive in the process.

“The three big pieces of growth for us are selection, lower prices and speed,” says Dave Clark, Vice President of worldwide operations and customer service for Amazon “Adding an additional day to our delivery schedule is all about speed. Now, an Amazon customer can order a backpack and a Kindle for their child on Friday and be packing it up on Sunday for school on Monday.”

Sunday deliveries will benefit Amazon, the US Postal Service and customers everywhere. It is a win-win for everybody and you can only wonder why nobody thought of this before.

About Gevril Group

Gevril GroupGevril Group is the exclusive US representative for select European watch brands, distributing and servicing luxury, fashion and sports timepieces at a wide range of price points. Gevril Group also operates a full-service watch repair department staffed by master Swiss watchmakers. Contact Gevril Group by email or by calling 845-425-9882.

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For Retailers, Amazon Can be a Real Jungle

Amazon Jungle


by Maggy Michaels Durrenberger  

Don’t be dazzled by Amazon’s customer base of 160 million or eBay’s claims of 233 million global customers. The third-party (3P) online sales environment is not for every retailer—or every product. Those who take the time to look over the terrain may just decide to cancel the safari.

Beware of Uncharted Territory

Navigating Amazon is not a simple matter. After a time-consuming and often complicated entry process, some products may fail to list. The larger the inventory, the tougher it will be to locate and fix the error. You will need to match your products to the “best” listings, select the “right” key words, and win the Holy Grail of Amazon—the little blue Buy Box that means the highest visibility, the most searches and the most sales. Amazon is mysterious about the variables leading to this prize but among them are positive seller standing, customer feedback, low price, consistent availability, high volume, low refund rates and low returns.

The Natives are Restless

While Amazon and eBay both operate large online marketplaces, Amazon became number one years ago—largely on the momentum of FBA (Fulfillment by Amazon), a service that stores and ships products and even handles customer service. Recent FBA changes are meeting with angry protests from Amazon sellers who say that sharp fee hikes cut deeply into their slim profit margins. The new FBA long-term storage policy is forcing some sellers to pay Amazon to destroy their year-old merchandise because Amazon would charge so much more to return it to them.

Major brands like Ralph Lauren, Hugo Boss and Guess are furious about unauthorized 3P sellers on Amazon that are pricing their merchandise below the minimum set for the label. Even the “little guy” who periodically sells items on Amazon can end up screaming. If Amazon runs an automated check on a seller that generates a false-positive for fraud, the seller account is immediately closed without explanation—or recourse. eBay at least provides customer service contacts, online chat and email options for resolving such issues. Not so in the jungle of Amazon.

About Gevril Group

Gevril GroupGevril Group is the exclusive US representative for select European watch brands, distributing and servicing luxury, fashion and sports timepieces at a wide range of price points. Gevril Group also operates a full-service watch repair department staffed by master Swiss watchmakers. Contact Gevril Group by email or by calling 845-425-9882.

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Are Brick-and-Mortar Stores a Dying Breed?

Retail Jewelry Store


by Maggy Michaels Durrenberger  

“Absolutely not” is the short answer. Yes, the rate of online sales continues to climb each year. But let’s not leap into an abyss of despair by interpreting that trend as the inevitable death knell for the physical retail store. The U.S. Census Bureau News reported that e-commerce represented only 5.5 percent of total sales in the first quarter of 2013. That means brick-and-mortar retail is still doing 94.5 percent of the business.

Visionary Apple Returns to Brick-and-Mortar

The disruptive nature of technology will continue to impact and shape our world, but the power of technology is not without limits. With all the things it can do, the human experience is completely missing. That’s why Apple shocked the world back in 2001 when it opened physical stores across the nation. After all, electronics was one thing that most people were happy to buy online. But Apple knew better. By tightly managing employee-to-customer interactions, along with every detail of the store, Apple was wildly successful at creating a fun and casual customer experience.

Will Behemoth Amazon Follow Suit?

So many rumors were flying around about Amazon opening physical stores that PBS talk show host Charlie Rose asked the question directly to CEO Jeff Bezos last November. Bezos said, “The answer is we would love to, but only if we could have a truly differentiated idea.” Keep in mind this perspective comes from the kingpin of online retailers. The phenomenon of Internet marketing is barely out of diapers and yet a few of the giants are already recognizing its shortcomings.

The Call is Clear: Do It Better

The real challenge facing brick-and-mortar stores, particularly those on the higher end, is the ability to respond creatively to today’s new multi-channel world. Saving a few dollars is not going to be the highest priority for many potential buyers. More than ever before, the physical retailer needs to create value-added, pleasurable shopping experiences that keep customers coming back.

Macy’s CEO Terry Lundgren summarized it well in a Reuters interview when he said, “It’s clear to me that the consumer likes shopping online. I am focused on [this]: how do we make them feel as comfortable and ready to buy in our stores as they do online?”

About Gevril Group

Gevril GroupGevril Group is the exclusive US representative for select European watch brands, distributing and servicing luxury, fashion and sports timepieces at a wide range of price points. Gevril Group also operates a full-service watch repair department staffed by master Swiss watchmakers. Contact Gevril Group by email or by calling 845-425-9882.

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The Internet Sales Tax Debate Continues

Marketplace Fairness Act Announcement


by John Sealander  

Is an Internet Sales Tax a Solution to a Problem That Doesn’t Exist?

With a stagnant economy and declining revenues, national, state, and even local governments are actively looking for new sources of income to fund government operations. One of the first places legislators look is the Internet. Although online shopping is still in its infancy, its growth has been nothing short of spectacular. The Bureau of the Census estimated there were $4.1 trillion in retail and wholesale transactions conducted over the Internet in 2010 and now everyone wants a piece of this pie.

Government entities at every level see online sales as an enormous new source of potential revenue. As their efforts to enact legislation to tax this new revenue stream increase, they have mounted a massive PR campaign to convince their constituents that taxing online businesses will level the playing field and offer significant benefits to traditional “brick and mortar” businesses in their districts. Large retailers like Walmart have jumped on this online taxation bandwagon, because they already have to charge tales tax on their online transactions anyway, largely as a result of having a physical presence in almost every state.

The Effect on Small Online Business

It’s a completely different story for smaller online retailers. The so-called Marketplace Fairness Act could be devastating for these businesses. The Marketplace Fairness Act represents a radical departure from existing tax law. If this legislation were to become law, individual states could begin to collect sales taxes on transactions that take place outside their borders. This is a significant expansion of current state taxing authority and is fundamentally unfair to smaller businesses.

83% of online sales currently come from “Big Box” retailers like Walmart, Best Buy, and Amazon. These companies already have a physical presence in most states and do collect sales tax on Internet sales. That’s why even though large retailers generally support the concept of an online sales tax; it could still hurt thousands of start-ups and smaller retailers.

These small businesses and an increasing number of their legislators now think that it would be an administrative nightmare for smaller business to comply with complex online sales tax laws, since each state and municipality can make their own rules. With thousands of different tax jurisdictions, each imposing their own tax rate, it could be extremely difficult for sellers to deal with a different set of rules for every out-of-state buyer.

Will The Marketplace Fairness Act Pass?

It is becoming increasingly clear that an Internet Sales Tax may be a solution to a problem that doesn’t even exist. After thirteen years of shopping online, these purchases still only represent 6% of total retail sales. In most jurisdictions, the traditional sales tax base is still solid.

Despite strong bipartisan support in congress, the Marketplace Fairness Act still faces a number of significant hurdles. The biggest of these hurdles is that an increasing number of people now believe that empowering states to collect sales taxes on transactions outside their own borders represents a radical departure from current tax policies and is fundamentally unfair. Rep. Morgan Griffith and Speaker John Boehner both predict that the Marketplace Fairness Act will not pass on the House floor.

With online sales continuing to grow at an astounding 16% a year, online taxation is not an issue that is going away soon. State and local governments still want a share of this lucrative pie. The real question now is whether it is fair to collect taxes to pay for local and state governments from a national audience. The jury is still out on this fundamental question.

About Gevril Group

Gevril GroupGevril Group is the exclusive US representative for select European watch brands, distributing and servicing luxury, fashion and sports timepieces at a wide range of price points. Gevril Group also operates a full-service watch repair department staffed by master Swiss watchmakers. Contact Gevril Group by email or by calling 845-425-9882.

Join the conversation! Follow Gevril Group on Facebook, Twitter and LinkedIn.

Please subscribe to the Gevril Group newsletter and blog digest.