June 29, 2015 Blog Update. Traditional brick and mortar retailers that fail to transform their traditional business model are incurring more business failures. In 2015 U.S. retailers closed 5,229 stores. In 2016 retailers have already announced 3,378 more stores closings. In today's Business Insider report Hayley Peterson cites 7 once dominant retailers that are now on the verge of bankruptcy within the next two years according to a Fitch Ratings report.
The Fitch report states "In each case, researchers determined that the same pressures were weighing on business: declining shopper traffic to malls; the rise of e-commerce; shifts in consumer spending away from apparel and accessories and more toward experiences like dining out and entertainment; and the rise of pricing competition from discount chains like dollar stores and Walmart.
Most of the retailers at high risk of default are challenged by declining mall traffic, competition from online and other types of retailers, and/or a lack of a compelling product line," researchers wrote. "Highly leveraged capital structures may become unsustainable in the face of these challenges."
Millennials ages 18-34 now comprise 32.4% of the U.S. population. They have grown up with smart phones, the internet and their buying preference is online purchasing. Retailers need to shift their business model to serve their customer to remain viable.