Retail closures surpass 9,000 in the year 2019
Retail in the United States is experiencing a significant shift, with store closures outpacing openings in 2019. According to a report by Retail Dive, Coresight analysts revealed that there have been 9,302 store closures, compared to only 4,454 store openings.
The wave of store shutterings early in the year was driven largely by bankruptcy liquidations. Notable among these was Family Dollar and Walgreens, which pared their footprints to adjust to declining sales in parts of their business. In a similar vein, the retailer Ascena wound down its Dressbarn banner, and Pier 1 is trying to tame its expenses before its struggles become a full-blown crisis.
Payless, a footwear retailer, filed for its second Chapter 11 bankruptcy in less than two years in February 2019, and its liquidation represents nearly a quarter of Coresight's total closure count for the year. Other retailers such as Gymboree, Fred's, Shopko, Charlotte Russe, Charming Charlie, and Charlotte Russe also contributed to the store closures.
The retail sector is still over-spaced, according to Coresight analysts, and in the midst of a correction. John Mercer, head of research at Coresight, predicts that store closures could slow in 2020 after a 2019 peak, but they are not expected to abate rapidly and significantly. Scott Carpenter, head of the retail solutions unit at B. Riley Financial's liquidation arm, Great American Group, suggests that mass closures could continue for up to two more years as malls close and retailers adjust their footprints.
The number of store closures in 2019 surpassed 9,302 by December 20, according to Coresight Research. This is nearly 60% more than the 5,844 store closures that occurred in 2018. Retail bankruptcy liquidations have increased, contributing to the high number of store closures in 2019.
Consumer buying trends shifting increasingly online is another factor contributing to the high number of store closures. Scott Carpenter predicts that 30% of current retail space could cease to exist in its current form due to this shift.
Despite shedding debt, hundreds of stores, revamping the executive team, and updating omnichannel capabilities, some retailers could not manage a sustainable turnaround. For instance, Sears and JCPenney, apart from Payless, have closed more than 1,000 stores in the last two years in the United States.
The number of store closures in 2020 might slow but is not expected to stop anytime soon. Other retailers have quietly tinkered with their footprints or pared them under pressure of sales declines. As the retail landscape continues to evolve, it is clear that adaptability and a strong online presence will be crucial for survival.
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