The Retail Apocalypse Threatens to Seep Into 2021
Retail apocalypse is a term used to describe a change in consumer spending patterns that resulted in the widespread closure of brick-and-mortar retail stores throughout the last decade, especially those belonging to huge retail chains like Sears and J.C. Penney. This is the result of a variety of different factors including the growth of e-commerce, market saturation, and the shrinking of the American middle class.
These underlying problems were only exacerbated by the COVID-19 pandemic, with thousands of stores closing their doors permanently. Unfortunately, newly available data reveals that the apocalypse will continue well into 2021, as many retailers have experienced unrecoverable losses.
The year 2019 already saw a significant increase in retail closures. During that year alone, 9,302 stores were closed, a 59% increase from 2018. This was the highest number of yearly closures since 2012 when this type of data tracking was first initiated. When the coronavirus pandemic hit in early 2020, it accelerated the slow death of retail stores.
According to data published by Business Insider in August 2020, over 8,300 stores have already been permanently closed. While this figure is worrying, it is still lower than the numbers from 2019. However, the final tally was far worse. According to Forbes, a total of 15,542 stores were closed by December 31 of that year.
While it’s evident that retail stores were facing difficulties long before the pandemic, the effects of the coronavirus on various businesses cannot be understated. Measures intended to curb the spread of the virus, including nationwide lockdowns, hastened the demise of many of these companies. Some retail chains closed only a portion of their stores, while others shut down almost completely and were forced to file for bankruptcy.
J.C. Penney, the brand synonymous with American mall culture, filed for Chapter 11 bankruptcy back in May 2020. In total, the company closed 175 stores so far. J.C. Penney managed to emerge from bankruptcy in December 2020, but we’re yet to see a tangible recovery.
Sears and Kmart have been in free fall for some time, with their combined store count amounting to only 95 in July 2020. Sears Holdings, the parent company of both of these chains, filed for bankruptcy in 2018 and was almost liquidated in 2019. While Sears and Kmart keep marching on, it’s only a matter of time before the stores further diminish in number.
GameStop, the troubled video game retailer, has also been on a downward spiral for some time now. While the company announced in March that it will close 320 stores, it ended up closing nearly 450 of them in 2020. In the third quarter, their sales dropped by 26.7%.
These are only some of the many large chains that saw massive store closures and significant drops in revenue. While retail stores have recovered from the lockdown in March and April of last year, this holiday season has indicated that most retail sectors are not out of the woods yet and may experience further losses.
Of course, not all sectors have faced losses during the pandemic. Essential retailers, such as those that sell groceries and home improvement products as well as those that have shifted towards online sales have experienced massive growth of revenue. In 2020, Walmart’s net sales grew by nearly $10 billion.
While most retailers hope that the COVID-19 jab will put them back on track, the question remains whether they’ll be able to hold out until a significant portion of the population has been inoculated.
Damjan won’t tell you how to run your business, but he will try to advise you on how to save your money and avoid financial ruin. As a staff writer at SmallBizGenius, he focuses on finding the most consumer-friendly services available and provides advice to both established and fledgling businesses out there.
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