Some of America’s biggest retailers, squeezed by e-commerce competitors, have been closing stores in large numbers in a trend that has been described as the ‘Retail Apocalypse’.
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However, former Macy's CEO Terry Lundgren, who cut his teeth in the heyday of department stores, thinks there are still too many.
“America has 23.5 square feet per human being devoted to retail—that’s too much,” Lundgren told FOX Business’ Maria Bartiromo on Friday. “Number two in the world I think is Australia which is 16 [square feet] and I think the U.K. is like 5 [square] feet—so we are way over-stored.”
As part of its restructuring strategy, the iconic department store chain itself announced in 2016 that it would shut 100 stores. In addition, the retailer took steps to reinvigorate its business by naming a new president and reorganized its merchandise structure. The Macy’s umbrella also includes Bloomingdale’s and Bluemercury.
Macy’s shares have gained an impressive 51% this year, while other retailers have seen their fortunes fall. J.C. Penney and Sears, two of the hardest hit, are struggling to survive.
Despite the industry’s challenges, Lundgren was optimistic on consumer spending.
“We should be overstored compared to most countries because we spend more. But not to the degree that this has occurred over the last ten years,” Lundgren explained.
“So start with the fact that America is over-stored, needs to shrink its retail space and with that retail space is inventory—[it] needs a shrinkage of supply,” he added. “When supply and demand gets back in line again that allows for a platform for takeoff on comp store sales growth to continue.”
In addition, Lundgren noted that some retailers can benefit by becoming smaller.
“Certain companies may be able to sell off unproductive real estate, repurpose real estate, [and] selloff even productive real estate because it’s more valuable to,” he explained.