Online retailing has sounded the death knell for the brick-and-mortar operations of many big box retailers, so much so that the latter category has jumped into the bandwagon of online selling. That said, online sales of big box retailers account only for a very small proportion of their total sales.
As they stake claim to their piece of online pie, these companies are increasingly diverting their investment into launching them online with a fair degree of success. In the process, they are trimming their physical presence. Additionally, to shore up margins, the retailers are closing down underperforming stores.
Against the backdrop, have the store count of big box retailers gone through a transformation over the last few years?
Here are the number of stores at the end of the third quarter of 2016 compared to the number of stores in 2007:
- J C Penney Company Inc (NYSE: JCP): 1,014 vs. 1,067.
- Kohl's Corporation (NYSE: KSS): 1,155 vs. 929.
- Macy's Inc (NYSE: M): 880 vs. 853.
- Nordstrom, Inc. (NYSE: JWN): 348 vs. 157.
- TJX Companies Inc (NYSE: TJX): 582 vs. 2,500.
- Wal-Mart Stores Inc (NYSE: WMT)*: 4,574 vs. 4,141.
Source: SEC Filings
In most cases, physical store counts have shown very little growth. Meanwhile, off-price retailer TJX Companies has seen its store count drop drastically by about one-fifth. Luxury retailer Nordstrom stood out, with a store count increase of roughly 122 percent. The anemic growth in physical stores is a natural corollary of a shift in focus to the online channel, where most of the selling happens these days.
It was this online focus that led Wal-Mart to buy Jet.com for $3 billion and raise its stake in JD.com, the No. 2 Chinese e-commerce site.
The company also revealed solid growth in online sales in its third quarter. The fad in the days to come will be the online channel and it is only prudent that these big box retailers go all out in enhancing their online presence, which would automatically curb expansion of their brick-and-mortar stores.
*Walmart's U.S. stores alone are taken into consideration.
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