The current economic environment has many industry watchers wondering whether another wave of retail turmoil is on the horizon. But the last round of so-called retail 'right-sizing' could prove instructive for many brands struggling to come to terms with their physical footprint.

"Not all store closings are signs of a retail apocalypse. In fact, there is ample reason why the thinking about rightsizing needs to shift," a group of analysts from Placer.ai write in a new whitepaper. "Rightsizing has been classically seen as a softer terminology to discuss store closures. But there is a significant trend of rightsizing that is more focused on optimization. If a chain can reach the same audience with 80 stores that it can with 90, why not reduce the operational cost? If a brand can leverage a wider mix of store formats to better reach a specific market – this push can drive greater long term success."

The team points to Macy's, Nordstrom, and JCPenney as examples of department store brands that have strategically closed stores and seen foot traffic increase at their open locations. While nearly 2,200 department store branches closed across the sub-sector between 2011 and 2020, fewer stores has equaled larger trade areas for brands like Macy's, which announced it would close one-fifth of its store count in 2020.  Rather than signaling the death knell for the brand, Macy's saw the number of visitors per venue increase as well as an increase in its average trade area size. And as Nordstrom strategically closed underperforming stores, its financial outlook improved dramatically.  JC Penney also came back from bankruptcy (and the closure of 30% of its store fleet) to increase its geographic trade area as well.