A man walks past a Banana Republic store in New York on January 10, 2021, which is out of order.
Scott Mlyn | CNBC
One retailer research and advisory group predicts that as many as 10,000 retailer closures will be announced by retailers in the United States this year, setting a new record as the Covid pandemic continues to take its toll on the industry and rethink businesses on how many places they can keep open.
10,000 closures will represent a 14% increase from 2020 levels, Coresight Research said in a report released Thursday. Coresight also predicts that retailers will announce 4,000 store openings in 2021, driven by growth by grocery retailers and dollar store chains.
Last year, in the depths of the pandemic, Coresight predicted in June that as many as 25,000 closures by retailers would be announced in 2020. But it ended up finding just 8,741, along with 3,304 openings. It was a slowdown from the 9,832 closures it followed in 2019 – the highest number Coresight has seen as long as it follows the closures and openings of retail.
The reason for the large gap between the final score and its initial forecast, Coresight said, was because some companies continued to see an increase in store-based sales. “Many retailers could also buy more time by lowering their rents and incurring their homeowners to stay open a little longer,” he said.
“In 2021, the implementation of [Covid] Vaccination programs should lead to a partial recovery in store-based sales, “said Deborah Weinswig, CEO and founder of Coresight. However, these programs can take many months to reach a wide base of consumers. “
Some companies will not be able to wait much longer, Weinswig said, especially those who did not have the holiday period they had hoped for. Consumers continue to spend more of their money online, which is another reason for the increased forecast of store closure this year, she said.
As of Jan. 22, Coresight said retailers in the U.S. have already announced 1,678 closures, including by Bath Bath & Beyond, Macy’s and JC Penney.
Weinswig also pointed to a pattern that took shape after the Great Recession in the retail industry, which may repeat itself this year.
“Although retail sales affected significantly in 2008 and 2009, the effects in terms of retail bankruptcies peaked in 2010,” she said. “We can see history repeating itself in 2021, leading to a greater number of store closures this year than we saw in 2020.”
According to Coresight, clothing retailers, including Ascena Retail Group and The Children’s Place, accounted for 36% of all store closures by 2020, numbering more than 3,000. The clothing category is also likely to make up a significant portion of the closures this year, he said.
A study released by First Insight earlier this week found that 40% of consumers plan to buy the same amount or less of clothing in brick-and-mortar stores after being vaccinated, indicating that there is no immediate rush to the mall will not be.