McNellis: The Death of Retail?

According to the San Francisco Chronicle, “The outlook for physical retailers is grim, the sector roiled by store closings, layoffs and bankruptcies.” John E. McNellis, a principal at McNellis Partners in Palo Alto has been in the retail development industry for thirty-five years has addressed the commonly asked question, “Is retail really dead?”

McNellis confirms that retail in 2017 has yet to be pretty, but it is not dead. Retail has been heavily influenced by e-commerce, an over-supply of retail footage as well as a fatal complacency among aging retailers. More than 3,000 stores have closed their doors so far this year, with predictions ranging up to 8,000 closures for the entire year.  Bankruptcies of once thriving retailers may have more to do with their poor merchandising, out-of-touch management and lack of execution.  Andy Dunn, the founder and CEO of Bonobos, points out that aside from Amazon, no other retail company has a chance on-line: “E-commerce is great. Only three problems: no IPOs, no M&A, no EBITDA”. After-all, the very best locations will always attract the next great retailer. Consider small, local supermarket-anchored shopping centers in urbanized locations. Where the co-tenants are all local business and the near-by population is both reasonably dense and unreasonably affluent. These factors have not and will not kill retail. Retail is just temporarily on the operating table.

 Reference: The Registry, May 2017