• Business Insider

Traditional apparel retailers are still struggling

Brick-and-mortar apparel retailers are struggling and as a result, their physical footprints are shrinking.

Most recently, Kenneth Cole announced plans to shutter all of its outlet stores in the US, and American Apparel filed for bankruptcy for the second time in just over a year. As the e-commerce market continues to grow in the US and worldwide, traditional retailers will likely have a harder time keeping up with shifts in the digital space.

Apparel retailers are struggling to maintain physical store performance.

  • Kenneth Cole: Apparel and accessories brand Kenneth Cole announced plans last week to shut down all of its outlet stores in the US, leaving it with just two flagship stores operating in the country, reports Fortune. Scaling back its underperforming brick-and-mortar locations could give Kenneth Cole the resources to be successful as it turns its attention to digital channels.

  • American Apparel: American Apparel has filed for Chapter 11 bankruptcy for the second time, reports USA Today. It first filed in October 2015, but the company's original turnaround plan was not enough to save the company as it focused mainly on closing underperforming stores, scaling back jobs, and launching stores in more profitable areas. The heightened focus on its physical presence with a lack of digital initiatives likely contributed to American Apparel's latest bankruptcy.

Amazon poses a larger threat than ever to traditional apparel retailers. Amazon is the top seller of online apparel, and it's building a lead over retailers' combined in-store and online apparel sales, according to Bloomberg. The company earned $16.3 billion in 2015 from apparel sales, which is more than the next five largest online competitors combined, including Macy's, Nordstrom, Kohl's, Gap, and L Brands. As Amazon gains apparel market share, traditional retailers are suffering from declining foot traffic, while trying to maximize performance across physical and digital channels.

Legacy apparel retailers could begin to rethink the purposes of their brick-and-mortars. Retailers with ample square footage have the physical space to either convert existing aisles or backrooms into storage for online orders. This, combined with the fact that many retail giants have densely distributed stores across the US, could enable retailers to adopt ship-from-store capabilities to serve more online orders, while also increasing inventory turnover within their physical locations.

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