With a recent flurry of store closures and bankruptcies, the doom and gloom predicted for the retail industry is difficult to escape.

We’ve seen the headlines: Sears, Macy’s and J.C. Penney and other retailers closed hundreds of stores in 2017. Citing data from real estate firm Cushman & Wakefield, Business Insider reported more than 9,000 stores shut their doors last year, while more than 50 retailers filed for bankruptcy.    

And the slashing isn’t expected to let up, Cushman & Wakefield notes. The firm estimated 12,000 stores will close this year, while 25 retailers, with Sears among them, could file for bankruptcy.

On the surface, it’s not a pretty picture for brick-and-mortar retail. But as Ana Serafin Smith, spokesperson for the National Retail Federation, says, it’s not the whole picture.

“The headlines of individual retailers filing for bankruptcy or store closures — that is true,” she said. “We’re seeing a variety of reasons why certain retailers have been in the headlines.”

A push for speed and convenience, driven largely by Amazon, continues to shape how retailers operate, but being able to leverage online capabilities against the experiences they can offer customers at brick-and-mortar locations will spell success for retailers.

“It’s the next wave of interaction that the retailer needs to offer the consumer,” Serafin Smith said. “Because of the convenience of the Internet and mobile apps, to draw the consumer into the store, you need to offer something that is going to be appealing to them.”

A broader look

Projections from Cushman & Wakefield and other real estate and research firms may inspire hand-wringing, but it’s important to consider what contributes to closings and which categories are experiencing them.

In “Debunking the Retail Apocalypse” by research and advocacy firm IHL Group, authors Lee Holman and Greg Buzek pointed to a report from Fung Global Retail & Technology that projected closings were to surpass openings for the first time in years, helping spur the “death of retail” narrative.

The problem, Holman and Buzek contend, was the report’s narrow scope.

“We quickly realized their numbers were based on deep research on public and large private department stores, specialty apparel retailers and supercenters/warehouse clubs, with less focus on other segments and smaller retailers (that just so happened to be expanding rapidly),” they wrote. “It’s great research, it’s just incomplete as a proxy for all of retail.”

Fung Global reports that retailers closed 6,985 stores in 2017, with about half coming from RadioShack, Payless, rue 21, Ascena Retail and Sears/Kmart. Those retailers each closed at least 350 stores.

Meanwhile, Fung Global noted 3,433 stores opened last year, up 50 percent over the year before. Dollar General and Dollar Tree took the lead, opening a combined 1,932 stores in 2017. German discount retailer Aldi opened 400 locations, while competitor Lidl opened 100.

IHL Group’s data is even more optimistic. Including bars, restaurants and fast food chains, the research firm reported 14,248 stores opened in 2017, while 10,168 closed. That’s a net gain of 4,080 stores.

“The news headlines on closings really focus on a very small number of retailers and segments that are concentrated in the mall-based stores,” Holman and Buzek wrote.

It’s no secret many U.S. malls are struggling. Since the 1970s, property developers have expanded retail mall space at four times the population growth rate. Citing data from Cowen Research, IHL noted the U.S. has 23.5 retail sq. ft. per capita, nearly 1.5 times more than Canada and five times more than the U.K. 

Inexpensive leases and historically low interest rates made borrowing and expanding much easier for large businesses seeking to develop retail empires. The result, Holman and Buzek wrote, is an overbuilt, monolithic physical retail climate.

“Quite frankly, because of short-term thinking, many retailers expanded beyond their ability to service customers,” the authors wrote. “The mindset became, ‘if it works in 100 locations, let’s do 500.’ The result is oversaturation.”

And as younger consumers shift toward urban areas — and incomes lag behind inflation — fewer people are spending their hard-earned cash at malls. Pair declining foot traffic with rising rent and the convenience of online shopping, and you’ve got a recipe for trouble. 

What we’re seeing now, Serafin Smith said, is a market correction — an attempt by retailers in some categories to trim the fat and return to a profitable course.

“It doesn’t make sense anymore (for some retailers) to have this store open, but let’s keep this other store open five miles away,” she said.

While department stores and specialty soft goods retailers are enduring the brunt of the downsizing pain, other categories continue to expand. IHL Group reported mass merchandisers had a net gain of 1,905 stores in 2017, followed by convenience stores with a net gain of 1,700 stores.

Supermarkets, meanwhile, opened 674 more stores than they closed in 2017, while drug stores opened 345 more. That’s good news for manufacturers hoping to serve die-hard candy lovers and impulse buyers looking for a pick-me-up.

But building stores is only half the battle. Retailers also have to get customers through the doors and in front of cash registers. And until recently, some may have put that on the back burner, IHL suggests.

“Many retailers must look in the mirror and take ownership of the fact that they have prioritized growth in stores over customer experience for years,” Holman and Buzek wrote. “The fact of the matter is that the store experience in many retailers is simply horrible. 

“They underinvested in training of their associates, underinvested in IT spend to integrate systems across channels, and too many still tolerate an inventory process that leads to 25 percent of customers leaving the store without buying at least one item they intended to buy.”

Those are harsh words, but Serafin Smith didn’t offer much sympathy, either.

“If (retailers are) not catching up with the times, then we’re going to see some losers,” she said.

The many sides of retail

In such a competitive environment, how are retailers setting themselves apart? There are several ways, Serafin Smith says.

First, retailers are beefing up their online capabilities, whether it means expanding inventory available for purchase online or streamlining purchasing and distribution processes. After all, consumers in a post-Amazon world demand “to be connected with the retailer at all hours of the day at the convenience of their own time and flexibility,” Serafin Smith said.

That includes in-store pickup. It gives busy consumers the option to have items pulled and packaged for them but still brings customers into the store, where they can squeeze their own tomatoes, and very likely, purchase more than what was on their original list.

However, some grocers and mass merchandisers are taking it a step further in hopes of sparring with Amazon, which acquired Whole Foods Market in June for $13.7 billion. They’re offering grocery delivery, either in-house or through third-party partners such as Instacart and Target-owned Shipt.

For example, Jewel-Osco, a Chicago area chain with 187 stores, launched grocery delivery in November, serviced entirely by the company’s newly-formed ecommerce department.

Jewel-Osco President Doug Cygan told the Chicago Tribune that the chain brought on 100 new employees and bought 60 delivery trucks to fulfill orders from 11 stores in the Chicago area. Through the service, customers can have groceries delivered same day or within the hour for an additional fee.

“We felt it was important to have our own people doing it,” Cygan said. “We’re excited about being able to provide what a lot of people want.”

Keith Cohn, founder and ceo of subscription service Candy Club, feels the same way about sending a rotating selection of sweets to nearly 150,000 subscribers each month.

“People just absolutely love the experience — the unboxing, the product, the presentation have all been received very well,” he said. “It gives people access to products they know and love they typically don’t have access to every day at a great value.”

Subscription box services have exploded over the last four years, offering everything from clothes and makeup to pet products and meal kits. The element of surprise, along with the prospect of receiving items carefully picked or customized to suit subscribers’ tastes and needs, contributes to the popularity. Citing data from Hitwise, Forbes reported 5.7 million U.S. shoppers use subscription boxes, while 37 million viewers visited subscription service websites in April 2017.

Four-year-old Candy Club caters to candy lovers who have the cash to drop on high-quality products, 60 percent of which come from outside the United States. For a 12-month plan, customers pay $22.99 per month, plus shipping. That adds up to at least $275 a year — in candy.

“We definitely index well over the average household,” Cohn said. “These are people who love candy, they have disposable income.”

Nonetheless, Cohn says Candy Club’s subscribers spend about half on its product mixes than they would at other speciality retailers.

And, as Candy Club works to double its business over the next year, it will introduce Candy Club-branded products at other wholesalers and retailers, with the goal of supplementing and bolstering the subscription service.

“We believe in omni-channel, so it’s not just about the online experience,” Cohn said. “People in their everyday lives will be able to purchase our products, try them, and we’re pretty certain people who do enjoy those products are going to come back and buy subscriptions as well.”

Speed, convenience and customization are cornerstones of online retailing, but it also serves as an opportunity to build a community.

1-800-Flowers.com is no stranger to the power of online retail, but after selling Fannie May and Harry London brands to Ferrero Group in 2017, the company was in need of an entity to keep its foot in the premium chocolate sector.

In November, the company launched Simply Chocolate, a gifting platform featuring items from partnering companies and brands vetted by a panel of chocolate experts. But Steve Druckman, president of 1-800-Flowers’ Midwest Food Group, says the company wants it to be more than that.

“We want to sell, and obviously selling product is important to what we do, but we also want the eyeballs and we want the passion here,” he told Candy Industry in November.

In addition to sharing each brand’s history and mission, Simply Chocolate offers an outlet for chocolate lovers to share their passion through social media. On Twitter, Instagram and Facebook, consumers can share their delight for chocolate.

“We’re trying to build a destination,” Druckman said. “Not just somewhere where you’re going to go, buy a quick gift, and get out. We really want people to celebrate it.”

But when it comes to hand-crafted confections, nothing replaces the experience of seeing, smelling and tasting it in person, especially when consumers are in their own neighborhoods, says Lacey Hesse, marketing manager for Retail Confectioners International.

“For smaller retail confectioners, welcoming customers into their candy shop is like welcoming friends into their home,” she said. “Smaller businesses have the advantage of creating a customer experience unique to their online competitors by making their business more personal.”

Whether it’s opening up kitchens so customers can watch employees pull taffy or pour caramels — or offering tours of an entire confectionery operation — finding ways to loop customers into a company’s story adds value to an otherwise run-of-the-mill store visit.

Among the confectioners Hesse cited as offering unique experiences was Schimpff’s Confectionery of Jeffersonville, Ind. The fourth-generation, family-owned business has been making candies by hand since 1891. 

Owner Warren Schimpff, and his wife, Jill, host daily demonstrations on how to make cinnamon red hots and other confections, often using century-old equipment. Schimpff’s also has an adjoining candy museum, housing thousands of pieces of American candy making equipment and memorabilia.

“Candy making is an art and a science,” Hesse said. “There is great value for confectioners who effectively communicate the intricacies and the passion that go into candy making.”

Other major confectionery brands have turned to the café concept — and even full service restaurants — to engage consumers beyond the traditional point of sale. Last year, Godiva opened a café in New York City, while Ghirardelli and Fannie May opened ones in Chicago in 2015 and 2016, respectively. Ferrero Group also opened a Nutella café in Chicago in 2017, offering savory items and treats made with its cult-classic chocolate hazelnut spread.

Serafin Smith said “retailtainment” is important for capturing consumers, particularly young Millennials and Generation Zers who seek new experiences suitable for sharing on Snapchat and Instagram.

“Retailers are getting really creative in that entertainment aspect to bring in the younger population that likes to come into the store, browse with their friends, shop with their friends and maybe do one other thing,” Serafin Smith said.

No matter how retailers choose to set themselves apart, Serafin Smith emphasized the need to ensure all resources and strategies play into each other, strengthening retailers’ position in the ever-changing climate.

“It’s making sure whatever you’re offering on social media, through your app, through your website, through the store all interacts and makes it a seamless process for the consumer,” she said. “Some retailers are doing it really well, others need to sharpen up and get that together.”