Like a bad Penney that keeps turning down, a retailer reportedly the 5th. largest in the country has continued its trend of shutting down more stores, and laying off more workers. Last year. JC Penney’s closed down 40 stores, and threw 2,000 people out of work. The Bad Penney turned down again on January 25th, announcing that the Plano, Texas based company would shed another 89 stores, leaving 2,400 workers out of a paycheck. Have you been keeping track of the retail losers these past several months? (see newsflash below for 12/23 and 12/29/00, and 1/4/01.) In the span of a couple of months, here’s the boxscore for the devastation caused by big box retailers like Wal-Mart: 491 stores closed in the past 60 days, and 54,965 jobs lost! Count ’em: Jobs lost: Sears, 2,400; Montgomery Ward, 37,000; Bradlees, 11,000; JC Penney, 5,565. Stores shut down: Sears, 89; Montgomery Ward, 250; Bradlees, 105; JC Penney, 47. One analyst referred to this massacre as “the terrible Christmas cold caught by US retailers.” One by-product of this thinning out of the ranks is that retail vacancy rates are climbing to 8%. “There’s just too much retail space,” said Peter Kozel of Standard & Poor’s. He says empty stores today are likely to stay that way: “In a weak retail environment, it’s hard to reposition these retail spaces.”
Wal-Mart has been compared to the plague: It kills the weak, and leaves the strong in a more vulnerable position. Most retailers don’t like to admit who has done them in, but sometimes a little honesty shines through. A writer for Reuters news, when describing the latest stumble by JC Penney, said the retailer was “hit hard by a slowing economy and fierce competition from discounters like Wal-Mart.” Is it really competition when your put a JC Penney or even Sears up against Wal-Mart’s resources? Wal-Mart has three times as many employees as JC Penney. Only an economist could come up with a positive spin on all these job losses. “A dropout of weak retailers will be a long-term positive for the retail industry,” reasoned Ken Doiron of Hartford Investment Management to Reuters news. “You’ll have less competitors and better margins.” Or, to put it a different way, more market share for Wal-Mart, and bigger markups on prices as the food chain shortens.