More than 9,300 retail department stores have shut their doors this year. As 2020 comes at us quickly, most are expecting the retail apocalypse to drag on.
While we are told consumerism and spending remains high, retail establishments are closing down: most permanently. Retailers actually set a new record for store closures in 2019 at a time when all the talking heads continue to say retail spending is high. In fact, Payless ShoeSource filed for bankruptcy in February and said it planned to close all of its 2,500 stores in what could be the largest retail liquidation in history.
Some of these companies will continue to close stores in 2020, but others are expected to announce new closures as well. This is not being offset by store openings either, as only 3,500 stores have opened their doors in 2019, according to the Motley Fool. These numbers were reported in October, and could be higher now, however, they aren’t high enough to offset the 9,300 closings.
An analyst at B. Riley FBR says that the retail industry remains oversupplied with stores and that the shakeout underway could continue for another 18 to 24 months.
According to the industry site Retail Dive, analyst Scott Carpenter suggests as much as 30% of existing retail space “would cease to exist in its current form, as consumer buying trends shift increasingly online.”
The wreckage is being felt at the shopping mall. With customer traffic in decline, mall operators are considering drastic measures to forestall the inevitable. Simon Property Group is considering bailing out troubled retailers, using some of its $6.8 billion in liquidity to keep its tenants afloat. –Motley Fool
While there are more than a few retailers who still seem well-positioned to expand, many others are financially distressed having taken on way too much debt putting them on the verge of bankruptcy as well. As the “retail apocalypse” stretches out over the next year or two, we’re likely to witness more closures from across the industry.