The traditional bricks and mortar retailers couldn't have survived the wrath brought about by the pandemic. They actually didn't.
Like the proverbial drowning man clutching at a straw, the retailers were holding onto the hope of the festive/holiday season. It did nothing. The dipping economy and stay at home orders further multiplied the financial pressure these retailers were under. Many downed shutters permanently, some even filed for bankruptcy protection.
Numbers big and sad
As per a compilation released recently by commercial real estate firm CoStar Group, retailers big and small closed 12,200 stores in the US in 2020. In June last year, the research and advisory firm Coresight Research had predicted that more than 20,000 store closure announcements by retailers in 2020, though eventually it ended up tracking only 8,741. As per Forbes, by the end of December 2020, as many as 15,542 store closures were announced by companies across the segments.
Store closures in 2021
The retail apocalypse is far from over, pandemic or no pandemic. For 2021, Coresight Research predicts around 10,000 store closures. "We're not done yet," Terry Lundgren, Macy's former CEO said in an interview to CNBC which can describe the sordid retail situation in the country. And in this year too, the report from CoStar Group further revealed that 40 major retailers filed for bankruptcy.
Department store chain J.C. Penney filed for Chapter 11 bankruptcy protection last year and closed more than 150 stores. Among other big global names that have seen close to two hundred store closures and have also filed for bankruptcy protection include Aldo, Tuesday Morning, J.C. Penney, Bed Bath and Beyond.
Does it get worse in 2021
Since January 22, Coresight Research said, 1,679 store closings have already been announced. Neiman Marcus, entered Chapter 11 in early May and emerged from bankruptcy in September. However, the company is already on the list of Moody's list of vulnerable retailers based on their financial circumstances. As a part of its bankruptcy process the department store chain JC Penney had announced that it would be closing a further 50 stores in 2021.
The department store chain Macy already announced in February 2020 that it planned to cut 2000 jobs and close one fifth of its stores or roughly 125 locations. In 2020, they closed 29 stores. Macy's Inc Chairman and CEO Jeff Gennette said that in November the company entered the quarter in a stronger than expected position. However, the company is going straight ahead with 45 more store closures in 2021. While releasing the list of 2021 store closings, the company also said that it would complete the process by April 30, 2021.
Bed Bath and Beyond
Even before the pandemic, home goods retailer Bed Bath and Beyond planned to close stores but in July the number increased to 200 planned closures. In late October, company officials said 200 stores are expected to close by the end of 2021 fiscal year. As per its plan, the company recently released a list of 43 stores that are slated to close by the end of February 2021.
Abercrombie & Fitch
Clothing retailer Abercrombie & Fitch announced in December last year that it would be closing flagship stores by the end of January 2021 at locations London, Paris, Munich, Dusseldorf, Brussels, Madrid and Fukuoka.
American Eagle Outfitters
Teeny bopper clothing retailer American Eagle Outfitters operates at close to 1,000 locations. In September, the company announced that it could close up to 500 stores in the next two years.
Fast fashion giant H&M
One of the largest clothing retailers H&M announced in October 2020 that it would be permanently closing 250 stores in 2021. "More and more customers started shopping online during the pandemic," H&M CEO Helena Helmersson said in a statement, further elaborating on the business model, "We are increasing digital investments, accelerating store consolidation and making the channels further integrated."
In May last year, the parent company of Victoria's Secret, L Brands said it would permanently close approximately 250 stores in the US and Canada in 2020. The company's interim CEO Stuart Burgdoerfer had said on a call with analysts, "What we see is a somewhat smaller but substantially more profitable business with a much better foundation, and then obviously a return to growth which is what all of us are looking for."
He had also said that apart from the 250 store closures in 2020, more could be expected in 2021 and probably a bit more in 2022. The worst is far from over.