Store closings in the first half of 2019 have already surpassed total store closures last year, a new report found.
A growing number of retailers are going out of business while others are reducing their physical presence.
The report from BDO USA, a professional services firm, found that retailers across a range of sizes and scale announced a combined 7,282 stores would be shuttering so far this year, outpacing last year’s less than 6,000 store closures. A total of 12,000 stores are expected to shutter in 2019, according to the report.
The firm attributed the spike in store closures and bankruptcies to a flat 2018 holiday shopping season, as well as the tariffs the Trump administration imposed on Chinese imports, the record-setting government shutdown, and the aftereffects of tax reform.
The average taxpayer saw their tax refund fall in 2019, leaving consumers with less money to spend in the spring and retailers to offer steep discounts to move products off their shelves, the firm said. The tariffs, meanwhile, led retailers to raise prices to keep their profit margins, affecting retail sales.
[Related: ‘Going to impact customers’: Retailers brace for Trump’s new tariffs]
The lackluster season contributed to 10 retailers filing for bankruptcy in the first three months of 2019, including Payless, Gymboree, and Charlotte Russe. The led to a total of nearly 3,700 store closures, the firm found.
Apparel specialty stores accounted for 36% of store closures for the first six months of the year, an uptick from 14% in all of 2018. Footwear retailers, meanwhile, made up 28% of store closures, up from 8% last year.
While the pace of store closures and bankruptcies has accelerated this year, the firm noted that retail sales have remained strong. Consumer spending spiked in July, according to data from the Commerce Department, and the economy has continued to grow.
Still, the firm urged retailers to “remain cautious heading into 2020” due to the ongoing trade war and rising debt burden. A wide swath of apparel and footwear imported from China was hit with 15% tariffs Sept. 1, and a second round of levies is expected to take effect Dec. 15.
As a result of the levies, Rick Helfenbein, president of the American Apparel & Footwear Association, warned last month the United States is approaching “retail Armageddon.”
