Retailing: Shrinking the Five-and-Dime

Shrinking the Five-and-Dime

It was a familiar story. Woolworth, once the king of downtown dime stores, was facing up to a common, if brutal, economic reality. Company officials said last week that falling sales and intense price competition have forced the 113-year-old clothing-and-variety-store chain to close, sell or restructure 900 of its 6,500 stores. The changes will jeopardize the jobs of 10,000 employees, more than 14% of its total work force.

Retailers have taken the biggest hit from a recession that is in its 19th month. In just the past four weeks, Zale, the nation's largest jewelry-store chain, and McCrory, a general merchandising store,...