Numbers that add up to an ugly year
2019 was a generally terrible year for traditional retailers, their shareholders, people who work in stores, and mall operators. But it was a great year for bargain hunters who love store-closing sales.
More than 9,300 stores shut down during the year — which is a record, say the retail analysts at Coresight Research. Closings jumped about 60% from the 5,844 that Coresight tracked in 2018.
A parade of bankruptcies
Retailers that made the trip to bankruptcy court in 2019 included:
Payless ShoeSource. The footwear retailer, founded in 1956, announced it would be shuttering its e-commerce site and its roughly 2,350 locations in the U.S., Puerto Rico and Canada. Chief Restructuring Officer Stephen Marcotta said in a news release that Payless was "ill-equipped to survive in today’s retail environment," because it had too much debt and too many stores.
Gymboree. The once-popular children's retailer couldn’t keep up with the demand for cute, Instagrammable clothes. When Gymboree Group filed for Chapter 11 bankruptcy in January 2019, the company announced plans to close more than 800 stores under its Gymboree and Crazy 8 banners.
Forever 21. The fast-fashion chain burned through its money by trying to expand into 47 countries in just six years. Now, 350 stores are closing globally, including 178 in the U.S. A failure to adapt to consumer tastes has taken a toll on Forever 21, as preferences among millennials and Gen Z’ers have shifted from low prices to higher quality. Online rivals including Fashion Nova and Zaful have put pressure on the company, too.
E-tailing soars as traditional retailing sinks
Forever 21 is hardly the only chain feeling that kind of squeeze; e-commerce competition has become a widespread problem for old-school brick-and-mortar retailers.
During the recent holiday shopping season, online sales grew nearly 19% and hit a record high, according to a MasterCard SpendingPulse report. But holiday sales at department stores dipped 1.8% compared to 2018.
As online shopping surges, traditional merchants are going bankrupt, closing scores of stores, and often deciding it's time to wind things down completely.
If you’re a fan of Chico's, the Gap or Bed Bath & Beyond, you might want to pay a visit before your nearest store is gone. Those are a few of the retailers that have already announced store closings for 2020.
The list is likely to keep growing as underwhelming foot traffic and mounting debt continue to plague brick-and-mortar retailing.
But the new year may not be nearly as apocalyptic for stores as 2019 was, says Deborah Weinswig, CEO of Coresight Research.
"Given the high number of closures in 2019 and the previously observed ebb and flow of closure peaks, closures may moderate in 2020," Weinswig says in a blog post.
Young-adult shoppers may help keep some stores open. Around 75% of Generation Z consumers say shopping in physical stores offers a better experience than shopping online, according to data collected by the International Council of Shopping Centers.
Still, Weinswig says there's no turning back the trends that are underway.
"The reshaping of U.S. physical retail is not complete; as more sales move online, we expect retail to see a steady, ongoing reconfiguring of physical space," she writes. In other words, more stores permanently putting "Closed" signs on their doors.