10% of US retail stores should close: report

Retailers have laid off workers, but they've mostly kept stores open - even opened new ones - as consumers cut back in the past two years, just as if they're expecting sales will rebound rapidly.

But that's not happening - this morning, Janney analyst David Strasser reports only "cautious" buyers at Target, Costco and BJ's - and now chains like Foot Locker, Macy's and Wal-Mart Sam's Club have started to close extra stores - with more to come, predicts Bloomberg News here.

Comparing the number of stores open, to past and estimated employment, GDP, consumer spending and net worth trends, Bloomberg analyst Rich Yamarone predicts "the already struggling commercial real estate sector will be hit hard," as the nation "will have a store excess" approaching 10% by year's end.

This is a cool presentation, with links to piles of back-up data, and chart inputs that can be adjusted by the reader to show what happens if hiring, spending and stock values grow faster (or slower) than expected.

I ran it by Steve Gartner, president of Metro Commercial Real Estate out in the burbs, and he wrote back, "Wow, that's a fascinating little program!" Though he minimizes its conclusions: He says retailers (his clients) "have learned how to operate stores more efficiently and profitably in the face of a raw increase in store square footage."  And, after all, "retailers are always closing stores, opening new ones, consolidating smaller locations into larger locations.  Markets shift...  Look at the Route 422 corridor or the Warrington, PA markets," where builders are hanging iron despite the recession.