As many as 25,000 stores could close by year’s end, most of them in malls, as part of the fallout from COVID-19, a new survey reveals.
The latest numbers from the New York-based research group exceeds its earlier forecast of 15,000 retail closings this year.
Already, the glut of vacancies has left landlords trying to figure out how to fill hundreds of thousands of square feet of mall space since few retailers are looking to increase their brick-and-mortar footprint, the network reported. Those that are staying prefer much smaller spaces.
The pandemic has already pushed several large retailers to consider bankruptcy. Ascena Retail Group, owner of Lane Bryant and Ann Taylor, is reportedly in talks with lenders about a possible bankruptcy filing.
Brooks Brothers, which calls itself the nation’s oldest retailer, and RTW Retailwinds Inc., the parent company of women’s wear-to-work apparel retailer New York & Co., warned it may file for Chapter 11 bankruptcy protection. In addition, J.Crew Group Inc. sought bankruptcy protection and department store chains Neiman Marcus Group, JCPenney and Stage Stores have also looked to bankruptcy filings amid the crisis.
Coresight has recorded a total of 4,005 announced closures by retailers in 2020. Between 55 percent to 60 percent of them are in America’s malls.
“We expect that a return to pre-crisis levels in offline discretionary retail sales overall will be gradual, as we expect consumer confidence, demand and spending to be short of normal for some time,” Coresight Founder and CEO Deborah Weinswig said in the report. “Given that recovery to pre-crisis levels may be gradual, retailers that were struggling to stay in business pre-crisis are unlikely to have the wherewithal to stay the course on the road to recovery and could end up closing a number of stores.”
A second report by eMarketer, a New York research company, is forecasting total retail sales in the U.S. will fall more than 10 percent this year and won’t recover to pre-COVID-19 levels until 2022, the network reported.
“This is the sharpest consumer spending freeze in decades in the US,” Cindy Liu, an eMarketer senior analyst, told CNBC.