Overseas research firm Coresight Research estimates that the number of closed stores will rise to 15000 by 2025. The company also expected to open about 5800 new stores in the United States this year, but the result was a net loss.
With major brands such as Big Lots and Party City announcing bankruptcy and closures in 2024, as well as recent announcements from Kohl's and Macy's that they will continue until 2025, Coresight Research estimates that over 1900 stores are expected to close by the second week of 2025.
To illustrate this point, according to Coresight Research data, there were 7323 store closures in 2024, the highest number of store closures since 2020 when nearly 10000 stores closed.
Compared to the 52 weeks of the same period in 2023, it has increased by nearly 60%.
1. The number of retail store closures in the United States has reached its highest level since the outbreak of the pandemic
John Mercer, Global Research Director at Coresight, stated that the same issues that will plague the industry in 2024 will continue to exist, "especially the competitive pressure from fast fashion platforms." In recent years, as inflationary consumers take advantage of their low prices, fast fashion platforms have become increasingly prominent.
Shein and Temu have impacted local retail businesses in the United States by offering a range of affordable products and clothing.
We believe that Temu and Shein pose a threat of up to $100 billion to retailers globally, "Mercer said. We estimate that their global sales last year were about $100 billion. The vast majority of that will be taken away from traditional retailers... taking away sales and market share
Coresight believes that the threats from Temu and Shein are a pressure that many retailers have not fully recognized, and there is almost no possibility of easing this competitive pressure, "Mercer said.
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We are not sure yet what impact tariffs will have. We are not sure how tariffs will affect the costs for retailers and domestic consumers, and how consumers will react to it, "he said.
Mercer stated that the risk of tariffs is that they will ultimately lead to an escalation of inflation.
We have seen how strongly American consumers reacted when inflation rose last time. The risk is that we will see more inflation and consumers will react the same way again, "he added.
Leaving aside taxes, the positive trend of Coresight Research's consumer confidence indicator and optimistic macroeconomic indicators suggest that consumer demand may be quite strong, Mercer said. But even with strong demand, "the risk faced by traditional retailers is, as I mentioned, that consumer demand is increasingly shifting towards new players
3. Macy's accelerates store closures this year
Deborah Weinswig, CEO of Coresight Research, stated in a statement that inflation coupled with "consumers increasingly inclined to shop online in search of the cheapest deals" had an impact on many physical retailers last year.
Multiple brands have become victims, including American Freight and Big Lots. The former announced that it will close all 329 of its stores as part of its parent company's bankruptcy proceedings; The latter applied for Chapter 11 bankruptcy protection in September to help sell the "vast majority" of its assets to "leading bidder" Nexus Capital Management. The company also announced plans to permanently close dozens of stores.
Macy's has also begun closing stores as part of its turnaround strategy announced in February 2024. The company's CEO Tony Spring told analysts during a recent earnings conference call that the company now expects to close about 65 stores this year, higher than the 50 store forecast announced earlier this year.
Party City is expected to close 738 stores, while Big Lots is expected to close around 661 stores, making them the two companies with the most store closures so far this year. 7-Eleven is closely following and is expected to close 333 stores.
Coresight also tracked Aldi CVS Health、Dollar General、Dollar Tree、Family Dollar、Five Below、JD Sports、Kohl's、Macy's、The TJX Companies Expected closure of Walgreens Boots Alliance.
However, most of the mentioned companies open stores simultaneously throughout the year.
Mercer stated that it is important to recognize that there are three types of retail closures. One scenario is that retailers may close all their stores as they are liquidating their assets. Some struggling retailers are restructuring and closing a large number of stores, but not necessarily all of them.
The third type of closure is when traditional retailers realize that they need to reshape their brands to better meet changing consumer preferences.