Another wave of store closures is expected to hit shopping centers and malls this year with "no light at the end of the tunnel," according to a new research report.
Retailers have already announced 2,187 new store closures since Jan. 1, including Gymboree, J.C. Penney, Charlotte Russe and Ann Taylor parent company Ascena Retail, according to Coresight Research. That's up 23 percent from the number of announcements documented at the same time last year, the market research group said. And there's "potentially many more on the way due to companies currently in the bankruptcy process and more on the horizon."
In 2018, Coresight tracked 5,524 store closure announcements in the U.S., which was down more than 30 percent from a record 8,139 closures announced in 2017. David Simon, CEO of the largest mall operator in the U.S., Simon Property Group, recently said the pace of store closures was slowing, but he expected more in 2019, with a handful of private equity-backed retailers on his so-called watch list.
Analysts say the U.S. is still "over-stored," especially when compared with other countries. As more purchases are happening online, there's less of a need for so much retail real estate. And the retailers that are still opening new locations are thinking much smaller.
Already this year, Coresight said retailers have announced 1,411 store openings (offsetting about 65 percent of store closures), largely stemming from dollar and discount chains.
Department store chains and specialty apparel retailers, meanwhile, are the two categories within retail still expected to shrink. But not everyone views store closures as bad news.
"You don't always look at store closures as a negative thing," said Brandon Famous, senior managing director of the retail advisory group at commercial real estate services firm CBRE. "That doesn't always dictate consumer sentiment. All the numbers point up," he added, referring to the industry forecasts for retail sales growth in 2019.
"With any vacant department store, an owner has the opportunity to increase their rent, to reinvigorate or reinvent the space," Famous said. "In many cases a landlord looks forward to the opportunity of getting that space back. In many cases it will be a positive thing."