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More retailers closing their doors

On Behalf of | Apr 1, 2014 | Contract Disputes

You may not have noticed it the last time you went to the mall, but traditional brick and mortar retailers are having a difficult time. The proliferation of online retailers is taking a bite out of the marketplace previously dominated by retailers with physical locations. Examples of this can be seen with a number of stores.

Electronics dealer Radio Shack recently announced that it would be closing 1,100 stores across the United States. This represents 20 percent of its national locations. Questions abound as to how the leases Radio Shack had with these various locations were settled.

The traditional electronics retailer lost nearly $200 million in the three months leading to 2014. Likewise, Staples will be closing 225 stores in an effort to save half a billion dollars over the next two years, and has been reducing the size of its existing stores as well.

Also, clothing retailers Macy’s and Sears will be closing stores, with Sears closing its flagship store in Chicago. All of these closures are indicative of two important trends: it is increasingly expensive to maintain a physical presence, and more consumers are finding merchandise online. It is estimated that online purchases are growing by 10 percent every year, and accounted for $963 billion in transactions in 2013.

This may not signal a death knell to the traditional way to shop, but it certain represents a shift in how to make things available to consumers. In the meantime, it also presents a number of legal issues that both retailers and landlords must deal with, and it takes experienced counsel to help resolve them.

Source: “A rough time for retail,” March 20, 2014