2018 may be the low point for retail, retail real estate

S&P Global – At the start of the new year, it is unclear whether 2018 will mark retail’s rock bottom or its renaissance, but most expect more disruption.

Some retail industry observers expect this year’s round of store closures and bankruptcies to taper after an early jolt, after retailers assess the 2017 holiday sales season and report earnings later this month. Others see more entrenched issues that will roil the space for months and force retail landlords to contend with even more tenant downsizing.

Any shared bearishness may come as a surprise. Early assessments of the holiday sales season have been positive, and even struggling middle-market department stores have reported strong sales. In the background, unemployment is low, wage growth has been steady in recent quarters, and consumer confidence is near a 17-year high.


Others have a more positive read on the scene. David Naumann, vice president of marketing at consulting firm Boston Retail Partners, sought to reframe the “retail apocalypse” as “the great retail transformation.” Department stores may be closing storefronts, but they will transform their business models, survive and thrive, he said.

“The department stores are transforming, and the ones that are going to succeed are the ones that really understand how to adapt to the new customer expectations, and how customers like to shop,” he said.

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