A great number of US retailers announced to close their stores – nearly 6,500 in this year. According to a recent report by Coresight Research, projected that U.S. store closures could reach 12,000 by the end of 2019.
A total number of 5,864 stores already shuttered in 2018. UBS Financial Services Inc. predicts that clothing stores are going to be hit the hardest, closing an estimated 21,000 stores — or 17% of all clothing shops across the US — by 2026.
Electronics and home furnishing stores are also expected to close thousands of stores, with the electronics category expected to shutter about 10,000 and home furnishing to close roughly 8,000.
The reasons behind the closures are rising of cost in sales per store, bankruptcies and rising of e-commerce sales.
Retailers in good financial shape are paring locations as their leases expire and 8,000 – 8,500 retail establishments would need to close in order to maintain a 2% increase in sales per store (to cover rising costs such as wages),” the report states.
Some retailers including Fred’s and Family Dollar are closing select stores in a bid to stay profitable, while chains like Payless have announced they are shuttering all of their stores.
Other retailers, such as Family Dollar, GNC (GNC), Walgreens (WBA), Signet Jewelers (SIG), Victoria’s Secret and JCPenney (JCP), are struggling and are shrinking their store footprints to save money.
As the internet continues to change shopping habits, stores across the United States continue to close. So, e-commerce sales continue to grow, tens of thousands of stores are set to shutter, according to a report released by UBS.
Analysts predict that e-commerce penetration is set to rise to 25% by 2026, up from its current position at 16% of total retail sales. If that happens, roughly 75,000 retail stores — excluding food — will have to close up shop over the next seven years.
E-commerce is already eating up an increasing amount of retail sales. In 2018, Amazon added $35 billion in retail sales across America, according to UBS. That’s the equivalent of roughly 7,700 stores.
However, some retailers were announcing new store openings. The Coresight report noted that this year, retailers have announced they will open 2,641 stores. After going public earlier this year, Levi’s announced plans to open 100 stores in its fiscal year, which ends in November. Dollar General announced it will open 975 stores this year.