Staples to Cut 225 Stores as Sales Move Online

If you can get what you want online, why go to the store? At least, that’s what an increasing number of Staples’ customers are asking themselves, and the office supplies giant is responding to the trend.
Ron Sargent, Staples

Ron Sargent, Staples

If you can get what you want online, why go to the store? At least, that’s what an increasing number of Staples’ customers are asking themselves, and the office supplies giant is responding to the trend. The company has just revealed its plan to close as many as 225 stores across North America by the end of 2015.

The numbers tell the story. In the fourth quarter of 2013, comparable brick-and-mortar store sales dropped 6 percent year over year, while online sales at Staples.com jumped 10 percent. The chain closed 2013 with an aggregate 1,846 stores across North America.

“The performance of our retail stores has consistently fallen short of our expectations over the past few years, and we continue to see customer demand shifting online,” Ronald Sargent, chairman and CEO of Staples, said during the company’s fourth quarter earnings call Thursday morning. “As a result, we will take more aggressive action to right-size our retail footprint and create an organization that is better positioned to respond to the changing needs of our customers.”

Actually, Staples has been slowly downsizing its footprint in the U.S. for a couple of years now, albeit in small doses. After making consistent additions to its stock since 1995 the company began shuttering stores in 2011, going from 1,583 that year to 1,547 in 2012, and then down to 1,515 in 2013. Last year, Staples eliminated 42 locations in the U.S. and Canada and executed 40 downsizings and relocations, leaving 1 million square feet on the market. The planned closing of 225 stores will leave a much larger chunk of vacant space. Although the company began decreasing the size of its prototype store to 12,000 square a couple of years ago, its traditional format is 24,000 square feet. Should only the larger stores be designated for closure, approximately 5.4 million square feet of retail space could be returned to the North American market.

“While we don’t take this decision lightly, we know it is the right thing to do for the long-term health of our business as we become more efficient and increase our focus online,” Sargent added during the call.

Staples is not alone. Other retailers that have come forward with plans to cut stores in 2014 include RadioShack, which revealed last week that it would axe 1,100 underperforming locations across the country. In January, JCPenney announced the impending closing of 33 underperforming stores, and in February, after nearly a century in business, off-price specialty retailer Loehmann’s succumbed to bankruptcy and began shutting down all 39 of its sites from California to Connecticut. The Loehmann’s lease designation rights have been acquired by Madison Capital, which recently hired A&G Realty Partners to orchestrate the sale of the leases, which range in size from 15,000 square feet to 60,000 square feet.

While it appears there’s a big year of store closings ahead, it’s still all relative. Per a report released by Chainlinks Retail Advisors after the RadioShack announcement, 1,500 unit closures were on tap in the U.S., compared to 2,500 in 2013 and more than 3,500 in 2012. “Assuming current totals hit the 2,000 mark by March, we are still in for a better year in terms of unit closures than we have seen since the onset of the Great Recession,” according to the report.