- Coresight Research estimates that 20,000 to 25,000 stores could permanently close in the U.S. this year, with 55% to 60% of those closures in malls, according to an emailed report.
- That would more than double last year's closures, and it represents a significant increase over Coresight's previous closure estimate for 2020. So far Coresight has counted 4,005 planned closures for the year.
- The research firm also expects retail bankruptcies to rise, including Chapter 7 liquidations potentially.
In the report, Coresight CEO and founder Deborah Weinswig pointed out how months of store closures, as the country worked to slow the spread of COVID-19, weakened balance sheets while also potentially leading to some permanent channel shifts to e-commerce.
"While there may be cases of distressed nondiscretionary retailers, those selling selected categories of discretionary goods will lead closures, driven principally by diminished cash flows on the back of enforced store closures," Weinswig said. "Apparel retail and department stores look set to feature prominently in total store closures."
Indeed, J.C. Penney already, since closing its store fleet in March, has filed for bankruptcy with plans to shrink its footprint by around a third — and that's if its Chapter 11 case goes according to plan. There is still the potential the retailer could liquidate entirely.
Meanwhile, Stage Stores has filed for bankruptcy with plans to liquidate, unless someone comes along to buy it, and Pier 1, which hoped to sell itself or reorganize, has opted instead to liquidate in bankruptcy. J. Crew and Tuesday Morning are also closing stores in bankruptcy, among others.
All of these will add to the store closure count. And many others could file in the coming months, and potentially liquidate, as retailers assess their business plans in an uncertain market and lenders get more comfortable with going-out-of-business sales amid a pandemic.
And those are just the bankrupt retailers. Many others will close stores as they face depressed sales or adapt to trends already in place that have accelerated with the pandemic. Macy's, for example, had already announced plans to close more than 100 stores before the COVID-19 crisis as part of a turnaround effort.
Well before the pandemic, many predicted that mass store closures would continue as mall traffic declined, e-commerce took hold, off-price gained market share, consumer spending habits changed and other factors forced consolidation.
Again, the pandemic has accelerated everything, and with the addition of a recession, it makes for yet more dramatic predictions. GreenStreet Advisors, for example, said in April that more than half of mall-based department stores could potentially close by the end of 2021.