A man passes by a Banana Republic store, which is going out of business, in New York, January 10, 2021.
Scott Mlyn | CNBC
One retail research and advisory group is forecasting there could be as many as 10,000 store closures announced by retailers in the United States this year, which would set a new record, as the Covid pandemic continues to take a toll on the industry and companies rethink how many locations they’re able to keep open.
10,000 closures would represent a 14% uptick from 2020 levels, Coresight Research said in a report released Thursday. Coresight is also forecasting retailers will announce 4,000 store openings in 2021, driven by growth from grocery discounters and dollar store chains.
Last year, in the thick of the pandemic, Coresight predicted in the June that there were going to be as many as 25,000 closures announced by retailers in 2020. But it ended up tracking just 8,741, along with 3,304 openings. That was a deceleration from the 9,832 closures it tracked in 2019 — the highest number Coresight has seen as long as it has been following retail closings and openings.
The reason for the large gap between the final tally and its initial prediction, Coresight said, was because some companies have been “holding out for an upturn in store-based sales.” Many retailers have also been able to buy more time by reducing their rents and striking deals with their landlords to be able to stay open a little longer, it said.
“In 2021, the rollout of [Covid] vaccination programs should result in a partial recovery in store-based sales,” Coresight CEO and Founder Deborah Weinswig said. “However, these programs may take many months to reach a wide base of consumers.”
Some companies won’t be able to wait much longer, Weinswig said, especially those that didn’t have the holiday season they were hoping for. Consumers are going to continue to spend more of their money online, which is another reason for the heightened store closure forecast this year, she said.
As of Jan. 22, Coresight said retailers in the U.S. have already announced 1,678 closures, which include ones by Bed Bath & Beyond, Macy’s and J.C. Penney.
Weinswig also pointed to a pattern that took shape in the retail industry after the Great Recession, which could repeat itself this year.
“Although retail was significantly impacted in 2008 and 2009, the repercussions in terms of retail bankruptcies peaked in 2010,” she said. “We could see history repeat itself in 2021, resulting in greater numbers of store closures this year than we saw in 2020.”
Coresight said apparel retailers, including Ascena Retail Group and The Children’s Place, accounted for 36% of all store closures in 2020, tallying more than 3,000. The apparel category will likely make up a substantial portion of closures this year, too, it said.
A study released earlier this week by First Insight found 40% of consumers plan to shop for apparel in brick-and-mortar stores either the same amount or less after being vaccinated, implying there won’t be an immediate rush back to the mall.
