Sometimes you see them, sometimes you don’t.
According to data from Coresight Research, more stores closed than opened for the first time this year.
The company uses a weekly tracker to track how many stores companies plan to close or confirm they will close. This week’s tracker included the announcement that Conn’s HomePlus will close nearly all of its stores and that Big Lots plans to close nearly 300 stores in calendar year 2024.
John Harmon, managing director of technology research at Coresight, said the company had forecast earlier this year that the industry would see 5,500 new stores open and 4,000 stores close. But just over eight months into the year, the number of planned or confirmed store closures stands at 4,548, while 4,426 stores have opened.
The number of store openings remained almost the same as in 2023, with a change of less than 0.1 percent. However, the number of store closures increased by 31.4 percent compared to the previous year.
Harmon pointed out that bankruptcies are one of the reasons for the higher-than-forecast store closures.
“Bankruptcies are difficult to predict. We have tools to identify which companies are likely to file for bankruptcy … but bankruptcies are the wild card. They really change the total number (of bankruptcies),” he said.
Conn’s, the furniture and home furnishings retailer, filed for bankruptcy last month and recently announced it would close over 500 of its stores, more than 10 percent of the total number of store closures tracked by Coresight this year. Other bankruptcies that have forced major store closures this year include Rue21, Express and 99 Cents Only Stores.
In total, these three bankruptcies led to the closure of over 900 branches. This corresponds to about 20 percent of the total number of branch closures this year.
For now, Harmon said, Coresight has no plans to revise its 2024 forecasts. Although bankruptcies have led to a rise in the number of store closures this year, the air is far from clear for retailers not affected by looming cash problems, Harmon said.
Even as many continue to reduce inventories because they are overstocked, new challenges continue to emerge, he said.
“Retailers are under several pressures. First, consumers are watching their budget and saving. E-commerce is always a threat, but there are new threats, new competition from Shein and Temu in the apparel sector, which even made Amazon sit up and talk about products directly from China,” he said. “And then of course there is social media. Generation Z uses TikTok a lot; that’s where they get their inspiration. Shopping through social media is gaining share. It’s attractive – it’s right, it’s right where you look.”
Companies that have not filed for bankruptcy include Family Dollar with 620 planned closures, CVS with 315 impending closures and Big Lots with 302 impending closures.
Even as these stores close, discount retailers such as Dollar General, Five Below and Dollar Tree continue to pop up; this year these companies have opened 754, 227 and 165 stores respectively.
Harmon said one reason these companies are able to open new stores is because consumers are interested in shopping on a budget amid tight budgets. Although several discount stores have been successful, far more discount stores are closing than opening.
Harmon said this was likely due to the high number of stores Family Dollar had to close, and not necessarily a reflection of the discount industry itself. Still, he noted, dollar and discount stores must be wary as they try to compete with industry giant Walmart, which offers consumers consistently low prices. Walmart is expected to open 30 stores this year, according to Coresight.
Dollar and discount stores aren’t the only ones having to come up with ways to stand out from the competition and attract customers—especially as retailers prepare for the upcoming holiday season.
“We’ve been talking about the shopping experience for years – not just offering a product or a transaction, but something that is a pleasant experience for the consumer, (like) a good loyalty program or in-store activities, or enough employees,” he said.
Technology can also help brands and retailers future-proof their businesses, Harmon claimed. Artificial intelligence is already helping retailers distribute inventory in stores, personalize the customer experience and more. Many consumer-facing AI use cases so far have been limited to e-commerce, although other technologies continue to serve retailers well as many are still breaking new ground with AI systems and their implementation.
In particular, RFID can help employees locate items in a store, enhance the in-store shopping experience, and keep customers coming back to stores.
“(RFID) is good for associates because they don’t have to dig through piles of stuff to find an item; it’s good for customers because associates can find it faster, and retailers know what inventory is in the store. That’s important for online purchases with in-store pickup, curbside pickup (and) online inventory counts. You don’t want to go to a retailer’s website and it says they have five of the items you’re looking for, and then you go to the store and they don’t have any,” he said. “Consumers want to make fewer and more focused shopping trips, so it’s really important that the stores they visit have everything they need.”
