Store Closings to Jump 37.5% in 2012

Christopher & Banks, Syms and Filene's Basement are the most recent retailers to shutter some of their stores, bringing the total number of store closings so far in 2011 to 3,126. While this may seem like a large figure, it's actually the lowest number of store closings in a year for the past 10 years, according to an article on Retailtrafficmag.com.

 

But the slowdown in store closings in 2011 doesn't necessarily mean that the economy and consumer confidence are recovering. According to Michael S. Wiener, president and CEO of Excess Space Retail Services Inc., a national consulting and advisory firm, total store closings in 2012 will most likely top 5,000 — and that's not including closings due to bankruptcies and liquidations.

 

Why the higher number next year? The article cites continued low consumer confidence and economic uncertainty among retailers as potential contributors to decreased sales. Additionally, since the financial crisis of 2008, many retailers have already restructured a significant number of their leases, so if stores are not bringing in a sufficient volume of profitable sales now, even lower rents can't save them.

 

There are other signs that 2011's 3,100-plus store closings represent a recent historical low. With the strong growth of e-commerce during the past decade, the U.S. retail industry may simply be slimming down an "over-stored" landscape. Five years during the past decade have seen total store closings of over 5,000, with 2001 setting the record at 7,041.

 

While the recession of 2008 is still fresh in retailers' minds (coming in second with a total of 6,913 store closings), it clearly did not have the biggest impact on store closings, indicating that other factors aside from the direct state of the economy contribute to poor sales volume and, in turn, store closings.

 

The article also notes that the majority of store closings in 2011 have been in the books, apparel and footwear verticals. However, looking ahead to 2012, the electronics sector is also in danger, as well as small to mid-tier department stores.

 

Given financial uncertainty across the globe, it seems that both consumers and retailers will remain cautious in 2012. The projected 5,000 store closings in 2012 could even be a conservative estimate: Andy Graiser, co-president of DJM Realty, notes that the number "could go much higher if some of [these] uncertainties took a turn for the worse."

 

Below is the number of store closings per year for the past 10 years:

 

2001: 7,041

2002: 5,950

2003: 4,973

2004: 6,303

2005: 4,269

2006: 4,730

2007: 4,603

2008: 6,913

2009: 4,811

2010: 5,572

2011: 3,126

 

For related content: Christopher & Banks Closes 100 Stores, Cuts Workforce