Chain store shuttering can hurt, help small businesses
When big retail chains close stores, it can be a blow or a blessing for small businesses near the shuttered merchants.
Many shoppers gravitate to a smaller store when one of the big players shuts down, says Aric Shlifka, the owner of Kiddles Sports in Lake Forest, Ill. The demise of the Sports Authority last year has contributed to a 5 percent increase in business for him since then, and he’s noticed more demand for athletic shoes and bicycles in particular.
“I feel mass/chain store closings scare people, and make them realize how many jobs and tax dollars are lost and want to support the local retailers more,” Shlifka says.
As more shoppers shift online, stores have been suffering and chains have been cutting back. Macy’s is closing some stores. Sears Holdings Corp. reportedly plans to close another 66 Sears and Kmart stores, adding to 150 closings in April. Many of the store closings are in big malls, but in smaller strip shopping centers, hundreds have also been shutting down.
Some businesses can see their own sales suffer when a big nearby retailer that has been a shopper magnet disappears. But smaller retail competitors can pick up customers, and sometimes other businesses — ancillary or unrelated to retail — find opportunities in vacant real estate.
The retail remains of a shuttered store mean franchisees of 1-800-GOT-JUNK? often get contracts to empty out the chain stores, loading dump trucks with unwanted mannequins, shelving, racks, showcases and other fixtures and hauling it all away.
Corporate executives at 1-800-GOT-JUNK? are regularly in touch with big chains and often know in advance when stores will be closing, says Scott Perry, an account manager with the franchise. It can take a month in some cases to remove and cart away the items; franchisees have handled 150 truckloads from a closed Macy’s in Pittsburgh and 120 from a Bon-Ton in Sheboygan, Wis., Perry says.
James Williams, owner of a 1-800-GOT-JUNK? franchise in Burbank, Calif., says that in removing the contents of a store, his company donates usable equipment such as vacuum cleaners to charities and takes furniture and fixtures to businesses that will recycle what they can.
But there’s also a downside for his business when a store closes — he’s just lost a customer who regularly needed trucks to haul unwanted fixtures and other items.
“Some of these were clients that we were serving on a weekly or monthly basis,” Williams says. “We see the negative impact on our business immediately after the closing.”
When a department store in a shopping mall or big box store in a strip center closes, nearby retailers can see fewer shoppers and lower sales. Some mall operators have staged events and activities near the shuttered stores to attract more shoppers.
Yogibo, which sells bean bag chairs and other casual furniture, had to work harder to make itself more visible to shoppers after Sears vacated parts of its stores in malls in Freehold, N.J., and Danbury, Conn., CEO Eyal Levy says. The retailer had a 10 percent sales slide while the Sears space was vacant, and also has had lower sales since a J.C. Penney store shut in Natick, Mass., two years ago.
So it has increased its advertising, offering its chairs to mall operators for events such as children’s story hours.
“We had to be more active. We couldn’t rely on mall foot traffic,” Levy says.