2019 Will See More Store Closures Than the Previous Record Year

The narrative about the retail market has changed. This year, more investors and industry experts are talking about the revival of retail, the strong yield-producing opportunities and how owners and retailers have evolved to new consumer demands. However, the latest stats don’t back up those claims. According to the most recent retail report from Ten-X Commercial, retail store closures this year are on track to surpass the previous record in 2017. J.C. Penney, Bed Bath & Beyond, CVS and Forever 21 are all closing several store locations.

“When you look at the store closing stats and that we are on pace for more store closings in 2019 than in 2017, it speaks to a situation that hasn’t ameliorated yet,” Peter Muoio, chief economist at Ten-X Commercial, tells GlobeSt.com. “Both 2017 and 2019 were strong years for the economy, and even as you look at the macro economy today, all of the data from the consumer sector is that it is still strong. So, for this to be happening while consumers are spending certainly points to something that hasn’t stabilized yet at this point in time.”

The possibility of a recession is putting more pressure on the situation. Predictions of a recession hitting next year have increased, and with retail suffering during an up cycle, it could mean more storms ahead for the market. “If the overall economy were to down cycle, what will that mean? Have we gotten all of the store closures out of the way, or will a downturn exacerbate the situation even further? I think that it is going to hurt it. It is going to hurt e-retail too,” says Muoio. “If overall consumer spending went down, it would hurt all of the different venues, but it is certainly going to hurt brick-and-mortar stores and put more pressure on them than they have today with the strong tide.”

As for the headlines, it is true that retail is evolving, but that evolution hasn’t offset the quick dominance of ecommerce. “There is a degree to which retail is doing well, like ecommerce retailers opening brick-and-mortar, and that is all true, but the reality is that the percentage of retail sales that is going through the e-retail channels is going to increase at expense of brick-and-mortar,” says Muoio.

In fact, as brick-and-mortar evolves, ecommerce has been close behind. “It started with commodity items, but it then shifted toward clothes with easy returns and sizing algorithms,” says Muoio. Now there is online grocery shopping and banking. There is no real part of retail spending now that isn’t under assault from competitor pressures from e-retail.”