A man walks past a Banana Republic store in New York on January 10, 2021 that is closing down.
Scott Mlyn | CNBC
A retail research and advisory group predicts up to 10,000 store closings could be announced by retailers in the US this year, which would set a new record as the Covid pandemic continues to weigh on the industry and companies, like Many Places, rethink can keep it open.
10,000 closings would represent a 14% increase from 2020, Coresight Research said in a report released Thursday. Coresight also predicts that retailers will announce 4,000 store openings in 2021, driven by the growth of grocery discounters and dollar chain stores.
Last year, amid the pandemic, Coresight forecast in June that up to 25,000 retailer closings would be announced in 2020. In the end, however, only 8,741 closings and 3,304 new openings were recorded. This was a slowdown from the 9,832 closings in 2019 – the highest number Coresight has seen since retail closings and openings.
According to Coresight, the reason for the large gap between the final balance sheet and its initial forecast was that some companies “have been waiting for store sales to pick up”. Many retailers have also been able to gain more time by lowering their rents and doing deals with their landlords to stay open a little longer, it said.
“In 2021, the [Covid] Immunization programs should lead to a partial recovery in business sales, “said Coresight CEO and Founder Deborah Weinswig.” However, it can take many months for these programs to reach a broad consumer base. “
Some companies won’t be able to wait long, Weinswig said, especially those that didn’t have the Christmas season they hoped for. Consumers will continue to spend more money online, which is another reason for the increased store closings forecast this year, she said.
According to Coresight, US retailers have already announced 1,678 closings on Jan. 22, including those from Bed Bath & Beyond, Macy’s and JC Penney.
Weinswig also pointed to a pattern that took shape in retail after the great recession and could repeat itself this year.
“Although retail was hit significantly in 2008 and 2009, the impact on consumer bankruptcies peaked in 2010,” she said. “We could see history repeat itself in 2021, which resulted in more store closures this year than in 2020.”
According to Coresight, clothing retailers including Ascena Retail Group and The Children’s Place accounted for 36% of all store closures in 2020, counting more than 3,000. The clothing category will likely make up a significant portion of the closings this year as well, it said.
A study published earlier this week by First Insight found that 40% of consumers plan to shop the same amount or less of clothing in brick and mortar stores after vaccination, meaning there is no immediate rush back to the mall.