More retail stores have already announced closures in 2020 than in all of 2019, the previous record year, according to a report by professional services firm BDO USA.
Through mid-August, more than 10,000 stores had closed, a number that partly reflects the 29 retail chains that have claimed bankruptcy so far this year. Many are household names, such as Pier 1, J. Crew, Neiman Marcus, J.C. Penney, Brooks Brothers, and Ascena, which owns Ann Taylor, LOFT, and Lane Bryant.
That figure also included retail chains that have closed at least 50 of their stores but have not claimed bankruptcy. This list included well-known outlets, such as Starbucks, Bed Bath & Beyond, AT&T, and Macy’s.
The report noted that the closures are concentrated in apparel, footwear, home furnishings, food, and department stores.
“The majority of store closures have taken place in malls, which have seen far less foot traffic due to sustained COVID-19 disruption,” the report stated.
Consumers shifting to shopping online, a trend that has been accelerated by the pandemic, has also forced retailers to shrink their brick-and-mortar footprints.
Retail sales for brick-and-mortar shops are projected to decrease by 14% this year, while e-commerce sales are projected to increase by 18%, according to research firm eMarketer.
While the coronavirus has cast the retail industry into uncertainty during the first half of the year, the BDO USA report stated that the second half will likely be equally uncertain, even with students returning to classes, remotely or otherwise, and the holidays approaching.
“While retailers can usually depend on cyclical spikes in consumer spending in the fall and winter months, the latter part of 2020 looks to be just as uncertain as the first half. As many schools shift to a virtual classroom model, retailers question whether traditionally stable back-to-school sales will result in disappointment,” the report stated.
