Store closures could be poised to hit a new high in 2020 as retailers contend with the coronavirus crisis.
According to a report released today by Coresight Research, there could be more than 15,000 gross store closures in the U.S. this year — up from a record-high 9,548 closures in 2019.
“The coronavirus outbreak will provide a sharp shock to physical retail. As stores shutter and consumers avoid public places, we expect shopper traffic to discretionary store formats to slow to a trickle, even if there is not a total lockdown,” the report reads.
The coronavirus pandemic has caused fashion and footwear retailers to shut doors in the U.S., Canada and Western Europe due to social-distancing guidelines and in some cases government-implemented quarantines. While those closures were meant to be temporary, Coresight forecasts that some of the units that have been shuttered will “never reopen their doors.”
“The enforced closures will hit retailers with limited cash/low liquidity, those already pinched badly by structural shifts and company-specific weaknesses, and those that are unable to translate whatever remaining consumer demand there is into sales on their websites,” the firm forecasts.
Coresight expects the impact of the coronavirus to “be especially hard on retailers of discretionary goods,” listing apparel and department stores as potential victims. Home goods, electronic and appliance purveyors are also likely “to be significantly affected” according to the report, while retailers selling essentials should expect to “see sustained demand, including a surge in the short run.”
Coresight estimates that some already-struggling retailers could be forced to file for bankruptcy should the coronavirus situation get worse. With companies likely to be cash-strapped, Coresight estimates that retailers will file for Chapter 7 and completely liquidate their assets — rather than filing for the more common Chapter 11 protection, wherein a debt-restructuring process occurs.
Due to the uncertainty of the coronavirus pandemic, several footwear-focused companies have withdrawn their guidance, such as Designer Brands Inc., TJX Companies Inc. and Steven Madden Ltd. Fast-fashion giant H&M has already indicated that it may have to shutter stores and lay off tens of thousands of workers as it suffers revenue setbacks caused by the public-health crisis.