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The Upside of Your Favorite Store Closing

Closing stores mean closing sales.

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“I loved Loehmann’s,” says Lindsey Royce, a 26-year-old advertising producer in New York City. “It was great product and affordable. I would shop there at least once a month on my way home from work.”

Loehmann’s closed all of its stores in 2014, seven years shy of celebrating its centennial. When Lindsey found out, she hit up the venerable department store five times, picking up doubly discounted shoes, clothing by Theory, and — most memorably — fancy lingerie: a teddy that was originally $200 for $30, and stockings that were originally $25 a piece for $3. Now that it’s closed, she tries to fill the hole with vintage stores, but, “there’s no place really like Loehmann’s,” she says. “I don't feel that I get the same quality and value at Century 21 and the Bloomingdale’s outlet, which are similar stores close by.”

Store closings, by now, have become as frequent and expected as biannual sales. Macy’s is again shuttering stores — 68 this year — and Sears is closing 108 Kmarts. The Limited abruptly closed all its stores in January after filing for bankruptcy. American Apparel is in the process of liquidating its considerable backstock of colorful clothing. Wet Seal is also done.

Photo: Jerritt Clark/Getty Images

This state of affairs has created a new rising class of consumers Foursquare calls “opportunists,” defined as shoppers who ignore a store for six months or more, then swoop in once it announces its closure to pick up deals. These opportunists made up four out of five shoppers at closeout sales. They’re split evenly between male and female shoppers. And they’re more likely to be millennials.

Foursquare came up with this designation after analyzing data from 50 million monthly users on how foot traffic shifted when Kmart and Macy’s closed locations in 2016. Together with the data on Black Friday shoppers, these data tell a story of millennials who will take deals where they find them — online or in stores, at whatever store currently has the best deals. The result is a game of clearance musical chairs, with consumers hopping from sale to sale. During Macy’s closeout sales in 2016, Sears lost 73 percent of its market share, Kohl’s lost 38 percent, Kmart lost 19 percent, and J.C. Penney lost 15 percent of its market share. (Keep in mind: This isn’t percent of total foot traffic, but their piece of the pie relative to their competitors in the area.) Eventually, their shares surged back after a few months. At least until the next round of store closings happen.

“I've never heard ‘opportunist shopper’ before, but that definitely fits,” Amanda tells me. She’s a 29-year-old attorney who does the Victoria’s Secret and Express semi-annual sales, goes to T.J. Maxx for the clearance stuff, and spent a recent winter Saturday at DSW right after clearance prices dropped on winter shoes. She visited Limited in her family’s hometown when she found out it was closing its stores, but hadn’t been there in probably two years. “The last time I went was definitely a sale, I believe Columbus Day weekend 2014,” she says.

Roxanne, 23, stopped by the closeout sale at a Macy’s in Queens, New York, to pick up some cologne for her boyfriend for Valentine’s Day. “I live in the area and this is like a hot topic, like, ‘oh my god, Macy’s is closing,’” she says. It was her first time inside the store in about a year. “The selection here is not that great. That’s why I never came,” she explains.

Photo: Alexander Scheuber/Getty Images

Then there are the “typical shoppers:” people who visited the store at least once in the past six months. Skewing slightly female and older (two-thirds are over 35), they’re bummed about the store closing and trying to score as much as they can before it shuts down for good. They’ll even travel to the nearest location that is still open once this one is done.

According to Foursquare’s data, when Kmart closed some locations last year, it retained 92 percent of its so-called typical shoppers, who were willing to travel on average an additional 4.3 miles to visit the next closest open Kmart — almost twice as far as they had to travel before. Macy’s didn’t fare so well. After its round of store closings in 2015, loyal Macy’s customers only had to travel about two extra miles to reach another Macy’s. And yet, the department store could only retain 71 percent of its typical shoppers. That means that a full 29 percent of customers decided to shop elsewhere — an alarmingly large number of customers to lose.

It’s easy to find a Macy’s that is closing. The company has helpfully changed the name of the specific locations in Google maps to: “Macy’s — Final Clearance Sale.” One is in Queens, in a small shopping center a 20-minute drive from two other Macy’s. I stopped by after a workday and found a couple of what Foursquare calls typical shoppers: Farhan and Moiz, both 25-year-old guys who live about 15 minutes away on Long Island. While they didn’t frequent this Macy’s, they were fans of other branches of the store.

“A friend of mine, a colleague, she came over here and she did some shopping and she bought something, like a jacket, for, like, 50 percent off,” Farhan said. “I’m a little bit disappointed,” he added with a shrug, looking at the empty swaths of sales floor with beige carpeting. “I didn’t find anything for myself over here.” He said he’ll go back to the Macy’s flagship store in Manhattan, and another nearby in Queens.

Photo: Anya Semenoff/Getty Images

Another typical shopper, Ann, 45, hadn’t even known this Macy’s was closing until she walked in with her daughter that evening. She said she’ll now likely shop at the one nearer to her work.

But another typical shopper in her mid-30s, Anna Lucatorto, said she was disappointed. “I’m gonna miss this place, because it was a nice location and everything,” she said. And where would she shop now? “Online. I did almost all my shopping online this year.”

Foursquare, after parsing all this data, put a rosy spin on it, recommending that stores — ones that are closing locations and their competitors alike — geo-target millennials with promotions and sales to lure them to other locations. But this strategy seems like a short-term solution and should only serve to accelerate the game of discount musical chairs, continually setting the expectations for prices lower and lower.

The most loyal customer of everyone I talked to, Lindsey Royce, loved Loehmann’s, but only because “they constantly had sales and I had a membership that got me 10 or 20 percent [off] whenever I went. I knew that they had been having profitability problems for a long time,” she admits. Like many millennials, she has been conditioned to seek out “value,” which means clothing at deep, deep discounts, all the time.

The story Macy’s, Kmart, and other mall stores are telling us is that they just need to close a few underperforming locations and everything will be fine. But what this data seems to show is a steady drip of attrition by consumers lured away from the in-person experience to online shopping, leaving behind consumers who are waiting for the next closeout sale with a gleam in their eye.

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