The Coronavirus Retail Shakeout: Who's Closing or Opening Stores
July 16 2020 - 7:29AM
Dow Jones News
By Luis Santiago and Suzanne Kapner
U.S. retailers are on track to close as many as 25,000 stores
this year as the coronavirus pandemic upends shopping habits. That
is more than double the 9,832 stores that closed in 2019, according
to Coresight Research. So far this year major U.S. chains have
announced more than 5,000 permanent closures.
More buying is shifting online, and consumers are spending less
than they did a year ago as they shelter at home, get furloughed or
lose their jobs. A growing number of chains that were struggling
before the health crisis have filed for bankruptcy protection in
recent months.
"Bankruptcies are driving a lot of the closures," said Deborah
Weinswig, chief executive of Coresight Research, which compiled the
data.
Here is a sector-by-sector look at net changes in store counts
as of July 10 at major U.S. retailers:
Apparel
Many clothing retailers were in bad shape before the pandemic as
consumers shifted spending to travel, entertainment and other
experiences, and new online startups siphoned sales from
established players. Gap Inc. and Victoria's Secret, owned by L
Brands Inc., which once dominated the nation's malls with hundreds
of stores, are shrinking. Brooks Brothers Group filed for
bankruptcy in July and plans to close 51 stores.
Discount
The dollar stores and discounters are bucking the trend. Dollar
General Corp. is moving ahead with nearly 1,000 new stores this
year, and its rivals Dollar Tree and Family Dollar also adding
hundreds of new locations. With high unemployment and other workers
furloughed, these chains are benefiting as shoppers tighten their
purse strings. "It's cool to be frugal right now," Ms. Weinswig
said.
Health/Drug/Beauty
The health, drug and beauty closings were driven by GNC Holdings
Inc., which filed for bankruptcy protection in June and plans to
close up to a sixth of its stores. Drugstore chains also have
pulled back on new openings, after years of expansion, seeking to
counter a drop in prescriptions by adding health services.
Home
Pier 1 Imports Inc. filed for bankruptcy in February and plans
to permanently shut its stores, accounting for most of the closings
in this category. Bed Bath & Beyond Inc., which was struggling
before the pandemic, is also closing hundreds of locations. On the
flip side, furniture and hardware chains have benefited from an
uptick in spending on home improvement.
Department Stores
Department stores were in decline before the pandemic as
shoppers shunned indoor malls. J.C. Penney Inc. and Stage Stores
Inc. filed for bankruptcy in May and are pulling back from many
malls, and Macy's Inc. plans to close a fifth of its stores over
the next three years.
The owner of Sears and Kmart filed for chapter 11 in 2018, and
although its assets were bought out of bankruptcy in 2019, it has
continued to close stores this year.
Other Retail
Sporting goods chain Modell's and the operator of Papyrus
stationery stores are closing locations after filing for bankruptcy
earlier this year. Mall favorites Signet Jewelers and GameStop are
also slimming down. Software giant Microsoft Corp. has decided to
abandon its bricks-and-mortar locations after opening its first
store more than a decade ago.
Grocery/Food
This is another area that is showing growth, though much of the
openings are coming from Aldi and Lidl, two German chains that have
been expanding in the U.S. Specialty food purveyor Harry &
David decided not to reopen most of its stores after the pandemic,
while Fairway Market filed for bankruptcy in January.
Write to Suzanne Kapner at Suzanne.Kapner@wsj.com
(END) Dow Jones Newswires
July 16, 2020 07:14 ET (11:14 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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