A man passes a Banana Republic store in New York, which will go out of business on January 10, 2021.
Scott Mlyn | CNBC
A retail research and advisory group predicts that as many as 10,000 store closings could 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 companies are rethinking how many locations are can keep them open.
10,000 closures would represent a 14% increase from 2020, Coresight Research said in a report published Thursday. Coresight also predicts that retailers will announce 4,000 store openings in 2021, driven by the growth of supermarkets and chain stores in dollar terms.
Last year, in the heat of the pandemic, Coresight predicted in June that as many as 25,000 closings would be announced by retailers by 2020. But in the end, only 8,741 followed, along with 3,304 openings. That was a slowdown from the 9,832 closings it tracked in 2019 – the highest number Coresight has seen as long as it has tracked store closings and openings.
The reason for the big gap between the final count and the original forecast, Coresight said, was because some companies “have been waiting for a pick-up in store sales.” Many retailers have also been able to buy more time by lowering their rents and making deals with their hosts to stay open a little longer.
“The rollout of [Covid] vaccination programs should result in a partial recovery in store-based sales, “said Coresight CEO and founder Deborah Weinswig.” However, it can take many months for these programs to reach a wide range of consumers. “
Some companies won’t be able to wait much longer, Weinswig said, especially those who didn’t have the holiday season they were hoping for. Consumers will continue to spend more of their money online, which is another reason for the heightened forecast for store closings this year, she said.
On Jan. 22, Coresight said retailers in the US have already announced 1,678 closings, including those from Bed Bath & Beyond, Macy’s and JC Penney.
Weinswig also pointed to a pattern that took shape in the retail trade after the Great Recession, which could repeat this year.
“Although retail sales were significantly impacted in 2008 and 2009, repercussions in terms of retail bankruptcies peaked in 2010,” she said. “We could see that history would repeat itself in 2021, resulting in more store closings this year than in 2020.”
According to Coresight, apparel retailers including Ascena Retail Group and The Children’s Place accounted for 36% of all store closings in 2020, with more than 3,000. The clothing category is also likely to make up a significant portion of the closings this year, he said.
A study published earlier this week by First Insight found that 40% of consumers plan to buy clothes from brick-and-mortar stores, either for the same amount or less after being vaccinated, implying that they won’t go straight back to the mall is driven.