Darrell Jones leafed through the men’s workout shirts in the J.C. Penney store at the King of Prussia Mall recently, knowing his days there were numbered.
“They have sports apparel stuff that’s really cheap,” said Jones, 52, of North Philadelphia, who works in security. “I don’t understand why they’re closing, and in a mall like this.”
His Penneys store, as well as those in Philadelphia Mills and Willow Grove Park malls, will begin liquidating on April 17, in preparation for permanent closure on June 18. The dates were confirmed by a company spokesman this week.
“The J.C. Penney closings are very far from a surprise; the store has been steadily shutting down locations since 2014,” Madeline Hurley, senior analyst at IBISWorld Inc., said Friday. “Mall anchor department stores like J.C. Penney, Macy’s, and Sears have all struggled to keep their brick-and-mortar stores profitable in light of falling mall foot traffic and rising competition from e-tailers and off-price stores.
“Although the slew of store closings is all but a good sign for the department store, J.C. Penney's future is less bleak than many other retailers, like Payless, which recently filed for bankruptcy,” Hurley said.
On Tuesday, Payless ShoeSource filed bankruptcy, joining a growing list of retail defaults in recent months. The moves stem from “increased discounter (including off-price and fast fashion apparel) and online penetration, and shifts in consumer spending toward services and experiences,” Fitch Ratings said the day after the Payless filing. “All of these factors have created a highly competitive retail environment and accelerated mall traffic declines.”
The Limited, Wet Seal, American Apparel, and BCBG Max Azria each announced more than 100 store closings in 2016.
Last month, Penneys announced that 138 stores and two distribution centers would be shuttering, affecting about 5,000 positions nationwide. The closures represented 13 percent to 14 percent of the company's store portfolio. The majority of them are in regional malls.
Company spokesman Joey Thomas said that the targeted stores were generally poor performers and that the company was trying to better align “its physical store footprint with an online presence to create a seamless experience.”
Fitch was more emphatic: “We believe the proliferation of e-commerce will not lead to the end of traditional retail, rather a fundamental alteration of the sector will occur. To remain relevant, retailers could develop robust supply chains as part of an omni-channel platform that will use online sales as a complement to in-store sales.”
Mall owners such as Pennsylvania Real Estate Investment Trust, which owns Willow Grove Park, and Simon Property Group, owner of King of Prussia and Philadelphia Mills, were seeking replacement tenants for the closing Penneys stores, which had been long-time anchors.
“Other uses include value-oriented big-box locations such as TJ Maxx, Home Goods, Nordstrom Rack, Ollie’s, and Dick’s Sporting Goods,” said retail consultant Jeff Green. “Also, taking a vacant department store and repurposing it into a movie theater, restaurant hub, or food hall is a trend that is gaining traction.”
That was little consolation to Jones, who said the fierce competition just took out his favorite store for gym clothes.
“If you look at the prices here, it’s about half of what you’d pay at Modell’s or Foot Locker,” he said as he pulled out a Nike hoodie from a sales rack. “Now they’re closing.”