A man passes a Banana Republic store, which is closing in New York on January 10, 2021.
Scott Mlyn | CNBC
A retail research and consultancy group is predicting that there may be up to 10,000 store closings announced by retailers in the United States this year, which would set a new record as the Covid pandemic continues to affect the industry and companies rethink how many places that they can keep open.
10,000 closings would represent a 14% increase from 2020 levels, Coresight Research said in a report released on Thursday. Coresight is also forecasting that retailers will announce 4,000 store openings in 2021, driven by the growth of discount stores and chain stores.
Last year, in the middle of the pandemic, Coresight predicted in June that there would be up to 25,000 closings announced by retailers in 2020. But it ended up tracking just 8,741, along with 3,304 openings. That was a slowdown from the 9,832 closings it tracked in 2019 – the highest number that Coresight has seen since following retail closings and openings.
The reason for the big gap between the final count and its initial forecast, Coresight said, was because some companies are “expecting an increase in store sales”. Many retailers have also been able to save more time by reducing their rents and closing deals with their owners so they can stay open a little longer, the report said.
“In 2021, the launch of [Covid] Vaccination programs are expected to result in a partial recovery in store sales, ”said Coresight CEO and founder Deborah Weinswig.
Some companies won’t be able to wait much longer, Weinswig said, especially those that didn’t have the vacation season they expected. Consumers will continue to spend more money online, another reason for forecasting even greater store closings this year, she said.
On January 22, Coresight said that retailers in the United States have already announced 1,678 closings, including those for Bed Bath & Beyond, Macy’s and JC Penney.
Weinswig also pointed to a pattern that formed in the retail sector after the Great Recession, which could be repeated this year.
“Although retail had a significant impact in 2008 and 2009, the repercussions in terms of retail bankruptcies peaked in 2010,” she said. “We can see history repeat itself in 2021, resulting in a greater number of store closings this year than we saw in 2020.”
Coresight said clothing retailers, including Ascena Retail Group and The Children’s Place, were responsible for 36% of all store closings in 2020, totaling more than 3,000. The clothing category is likely to be responsible for a substantial part of the closings this year, too, the company said.
A study released earlier this week by First Insight found that 40% of consumers plan to buy clothes in physical stores with the same amount or less after being vaccinated, implying that there will not be an immediate run back to the mall.