A man passes a Banana Republic store, which no longer operates, in New York, January 10, 2021.
Scott Mlyn | CNBC
A retail research and consultancy group predicts there could be up to 10,000 store closures announced by U.S. retailers this year, setting a new record as the Covid pandemic continues to affect industry and companies to rethink how many locations you can keep open.
10,000 closures would be a 14% increase from 2020 levels, Coresight Research said in a report released Thursday. Coresight also forecasts retailers will announce 4,000 store openings in 2021, driven by growth in food reducers and dollar store chains.
Last year, during the pandemic, Coresight predicted in June that there would be up to 25,000 closures announced by retailers in 2020. But it came to target only 8,741, along with 3,304 openings. This was a slowdown from 9,832 closures it tracked in 2019 – the highest number Coresight has seen in retail and openings.
The reason for the large gap between the final calculation and its initial prediction, Coresight said, was due to the fact that some companies “resist an increase in in-store sales.” Many retailers have also managed to buy more time, reduce rents and enter into contracts with their owners, so they can stay open a little longer, he said.
“In 2021, the launch of the program [Covid] Vaccination programs should result in a partial recovery in store-based sales, “said Coresight CEO and founder Deborah Weinswig.” However, these programs can take many months to reach a wide consumer base. “
Some companies will not be able to wait much longer, Weinswig said, especially those who did not have the holiday season they hoped for. Consumers will continue to spend more of their money online, which is another reason for the store’s increased closure this year, she said.
As of Jan. 22, Coresight said U.S. retailers have already announced 1,678 closures, including those at Bed Bath & Beyond, Macy’s and JC Penney.
Weinswig also highlighted a pattern that has taken shape in the retail industry after the Great Recession, which could be repeated this year.
“Although retail had a significant impact in 2008 and 2009, the impact on retail bankruptcies peaked in 2010,” she said. “We have seen history repeat itself in 2021, resulting in more store closures this year than we saw in 2020.”
Coresight said clothing retailers, including Ascena Retail Group and The Children’s Place, accounted for 36% of all store closures in 2020, totaling more than 3,000. The clothing category is likely to be a substantial part of the closures this year as well, he said.
A study released earlier this week by First Insight found that 40% of consumers plan to buy clothing in brick-and-mortar stores, either the same amount or less after vaccination, meaning there will be no immediate rush. back to the mall.