“Decisions like this are never easy, and this one has been especially difficult,” Nordstrom wrote. “But as many of you know, the dynamics of the downtown San Francisco market have changed dramatically over the past several years, impacting customer foot traffic to our stores and our ability to operate successfully.”
In a commentary to The Post, Westfield attributed the closure to “the deteriorating situation in downtown San Francisco” and blamed the departure of companies on “unsafe conditions for customers, retailers, and employees, coupled with the fact that these significant issues are preventing an economic recovery of the area.”
Whole Foods introduced in April it used to be shutting down its year-old flagship retailer downtown “for the time being” to “ensure the safety of our Team Members,” the corporate advised The Post. Retailers Anthropologie and Office Depot also are exiting the realm.
Other towns even have noticed retailer closures, and business professionals say the rage stays the early levels. REI shuttered its retailer in Portland, Ore., and Nike closed its retailer in Seattle. Walmart closing month introduced it used to be final 4 places in Chicago — part of its stores there — pronouncing it has misplaced tens of tens of millions of bucks on them once a year since its first retailer opened within the town 17 years in the past. The corporate additionally closed stores in D.C. and Portland.
“For the big box and the grocery [stores], which are trying to optimize a single-digit margin, it is very difficult to operate, and you will see more and more exits happening,” stated Lakshman Lakshmanan, senior director in marketing consultant Alvarez & Marsal’s shopper and retail crew.
Experts cite a number of causes as to why some shops are slowly exiting one of the greatest towns within the nation. The maximum noticeable affect has been remote paintings, which has decreased the collection of other folks in downtown spaces.
“Retail within urban areas, particularly commercial central business districts, are very dependent upon office traffic,” stated Tom McGee, president and leader government of the International Council of Shopping Centers, a business crew. “If you can’t drive the foot traffic … that’s going to be the biggest driver of their decision” to near a shop.
Organized crime additionally costs shops. As antagonistic to petty robbery, those crimes contain coordinated operations “from the theft of goods through the laundering of proceeds generated from the resale of stolen merchandise,” in step with a study from the National Retail Federation.
“We’re seeing the highest level of organized retail crime and theft ever,” Lakshmanan stated. “So much so that we have CFOs and even global CEOs saying that theft has becomes such a huge issue that we have significant draw or weigh-down on the profitability.”
Retailers reported that incidents of arranged retail crime higher in 2021 via a median of 26.5 p.c, in step with the retail federation. Store homeowners, the file says, blamed arranged retail crime for roughly part of the $94.5 billion misplaced that 12 months to retail shrink — the depletion of stock led to via one thing rather than gross sales.
Companies in primary city towns additionally face steep rents and rising hard work costs.
“It’s harder to hire people,” stated Mark Zandi, leader economist at Moody’s Analytics. “Labor shortages are a real problem, and wage costs have risen dramatically.
With a large number of economists expecting a recession and consumers pulling back from discretionary spending, many companies are assessing performance on a store-by-store basis to see which ones are profitable and gauge their growth prospects.
“I think retailers are now looking at the margins of individual stores that they operate and are beginning to ask, ‘Does it make sense to operate the store?’” Zandi stated.