It’s difficult to say that the retail Armageddon is being overblown when you consider 2017 is the worst year on record for store closures. In the first half of 2017, more than 300 retailers filed for bankruptcy; a 31% increase year-over-year. Since the start of the year, U.S. retailers have shuttered 6,700 stores.
The previous record for store closures in the U.S. was 6,163—which came during the financial crisis and start of the Great Recession. In 2016, 2,046 stores were shuttered and in 2015, 5,077 stores closed.
Most recently, Walgreens Boots Alliance Inc (NASDAQ:WBA) said it will shutter around 600 stores as part of its plan to buy nearly 2,000 Rite Aid Corporation (NYSE:RAD)locations.
Retail chains big and small have helped propel the number of closures to record levels. Other retail chains that have announced major closing include: RadioShack (1000 stores), Payless Inc. (700), Rue 21 (400), Ascena Retail (400), Teavana (379 stores), Sears and Kmart (358), Gymboree (350), The Limited (250), Family Christian (240), hhgregg (220), Gap (200), Game Stop (190), Bebe Stores Inc. (180), Wet Seal (171), Crocs (160), J.C. Penney (158), GameStop (150+), Michael Kors (up to 125), American Apparel (110), BCBG (120), Staples (70), Macy’s (68), Perfumania (64), Abercombie & Fitch (60), Guess (60), Vitamin World (51), and True Religion (27).
With two more months left in the year, the number of retail store closures will certainly climb even higher. Brokerage firm Credit Suisse said more than 8,600 traditional brick-and-mortar stores will close in 2017.
If that close rate holds, it would mean the U.S. will have lost close to 150-million square feet of retail space in 2017. To put that into perspective, that equals 2,604 football fields.
Longer term, Credit Suisse predicts that physical stores will face increased pressure from online giants like Amazon.com, Inc. (NASDAQ:AMZN) and e-commerce in general. By 2030, online sales will account for 35% of clothing sales as compared to just 17% today.
What will that look like for traditional retailers looking for foot traffic? Credit Suisse also predicts that as many as 25% of American malls will close by 2022. That works out to around 275 shopping centers.
Many point to the fact that there is too much retail space in the U.S. and the industry is ripe for consolidation. In the U.S., there are 2,353 square feet of space of shopping centers for every 100 Americans; in Canada, that number is 1,636, in Britain, it’s a measly 458 square feet.
But there has to be more to it than that; there’s a retail exodus going on in Canada, too. In Canada, mall stalwart Sears Canada Inc (TSE:SCC) recently announced it was closing all its stores, leaving 12,000 out of work. And in Britain, the retail industry is suffering its largest job losses since 2008.
The fact is, American shoppers are savvier and younger; on-the-go shoppers are more comfortable shopping online. Over the coming years, the American retail landscape will change drastically and thousands more retailers will shutter their doors, leaving thousands more out of work.
“Weekly Store Openings and Closures Tracker #30,” Fung Global Retail Tech, October 27, 2017.
“Walgreens Boots Alliance Reports Fourth Quarter and Fiscal 2017 Results,” Walgreens Boots Alliance, October 25, 2017.
“Retail Sets Records For Store Closures,” PYMNTS.com, October 25, 2017.
“Major Wall Street Firm Expects 25% of U.S. Malls to Close by 2022,” Fortune, May 31, 2017.
“A Record Amount of Brick and Mortar Stores Will Close in 2017,” Fortune, October 26, 2017.