The retail industry could lose as many as 10,000 stores in the U.S. in 2021, new research shows. Last week, Coresight Research published an analysis of the retail industry trends in 2020 and made projections for 2021 — factoring in the COVID-19 pandemic and the possibility of mass vaccinations. It still does not look good for brick-and-mortar stores.
Coresight is one of the most prominent retail research and advisory groups in the industry, according to a CNBC report, and is credited with predicting many of the big upheavals of 2020. The group counted 8,741 store closures in 2020 and 3,304 openings as well. It has already counted 1,678 closures in 2021 and predicts that number could reach as high as 10,000 before the year is over.
Coresight added up all the store closures announced by Bed Bath & Beyond, Macy's, J.C. Penney and other nationwide retailers. It noted that a total of 10,000 closures for the year would be a 14 percent rise from 2020 — though it noted that 2019 was higher at 9,832 closures. The whole retail industry was battling with online shopping and other changing trends even before the coronavirus hit.
Like so many other pandemic results, the impact on retailers was hard to measure early on. Coresight initially projected as many as 25,000 store closures in 2020 alone. Researchers now say that number was inflated because companies and store owners ended up "holding out for an upturn in store-based sales."
This means that retailers have used delay tactics to stay in business, expecting business to pick back up at any moment as quickly as it died away. Many have struck deals with landlords, cut costs and leveraged what they could to stay afloat, but time is running out and their schedules may not line up with the vaccination timeline.
"In 2021, the rollout of [Covid] vaccination programs should result in a partial recovery in store-based sales," said Coresight founder and CEO Deborah Weinswig. "However, these programs may take many months to reach a wide base of consumers."
This is already proving to be true, as slow and clumsy vaccination efforts in the U.S. have shown so far. In addition, Weinswig said that the full effects of the pandemic might not truly hit the retail industry until later this year or 2022. She extrapolated this based on the pattern of the Great Recession in 2008.
"Although retail was significantly impacted in 2008 and 2009, the repercussions in terms of retail bankruptcies peaked in 2010," she said. "We could see history repeat itself in 2021, resulting in greater numbers of store closures this year than we saw in 2020."