Closure of US retailers hits record pace: Why hospital leaders may want to take note

The financial peril many U.S. retailers have faced in recent years has led to thousands of closures and created numerous vacancies in shopping malls across the country, and Bloomberg forecasts the industry's future is bleak.

In the coming years, more than 10 percent of retail space — which equals nearly one billion square feet — might need to be closed, converted to serve other uses or renegotiated for reduced rent, according to data by CoStar Group cited by Bloomberg. Retail jobs are also rapidly dwindling. In March, retailers eliminated about 30,000 positions, the same total as February. The two-month period was the worst since 2009, according to the report.

"This created a bubble, and like housing, that bubble has now burst," said Urban Outfitters CEO Richard Hayne, according to the report. "We are seeing the results: Doors shuttering and rents retreating. This trend will continue for the foreseeable future and may even accelerate."

The rate of year-to-date store closures in 2017 is already outpacing that of 2008 during the peak of the recession. About 2,880 closures have been announced so far this year, compared with 1,153 at the same period in 2016, Credit Suisse Group AG analyst Christian Buss told Bloomberg.

The retail industry is suffering for a few main reasons, including internet shopping and in particular, Amazon. "Today, convenience is sitting at home in your underwear on your phone or iPad," said Mr. Buss, according to the report. "The types of trips you'll take to the mall and the number of trips you'll take are going to be different."

Hospital and health system leaders don't have to worry about being supplanted by online shopping. However, other trends do pose a threat to the hospital business, such as the shift to outpatient and ambulatory care; the emergence of standalone urgent care, retail facilities and microhospitals; and enhanced competition among hospitals in a market due to consolidation and the rise of healthcare consumerism. These forces, combined with lower reimbursement, make it critical for hospitals and health systems to adjust their strategies, be nimble and bend with the trends.

Hospitals that maintain a position of dominance in their market will likely continue to fare well in the future. Their competitors, however, will need to pare down low-volume service lines and consider ways to promote the specialties in which they excel. Adding new capabilities, such as consumer-facing telehealth, will satisfy patients' desire for on-demand, real-time care at their convenience.

Unlike shopping malls, people will always need hospitals for the acute care services they provide. But to thrive in an increasingly competitive landscape with savvier shoppers, healthcare leaders must ensure their strategies and offerings match consumer demands. 

More articles on facilities management:
Mercy Health's new Ohio facility officially open to patients
11 hospitals planning facility upgrades, expansions
UCHealth Memorial Hospital North expansion receives $25M lift

© Copyright ASC COMMUNICATIONS 2017. Interested in LINKING to or REPRINTING this content? View our policies by clicking here.

 

Top 40 Articles from the Past 6 Months