Now you see them, now you don’t.
For the first time this year, retail store closures have outpaced store openings, according to data from Coresight Research.
The firm uses a weekly tracker to follow how many stores companies plan to—or confirm that they will—close. This week’s tracker included the announcement that Conn’s HomePlus would close nearly all of its stores and that Big Lots plans to close nearly 300 stores in the 2024 calendar year.
John Harmon, Coresight’s managing director of technology research, said the firm projected earlier this year that the industry would see 5,500 new stores open and 4,000 stores close. However, just over eight months into the year, store closures—planned or confirmed—stand at 4,548, while store openings have come in at 4,426.
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Store openings have remained nearly at parity with 2023 openings, with less than 0.1 percent change. Closures, however, have increased by 31.4 percent year on year.
Harmon noted that part of the reason for above-projected store closures is bankruptcies.
“Bankruptcies are hard to predict. We have tools to identify which companies might be likely to file…but bankruptcies are the wild card. They really do change the [closure] totals a lot,” he said.
Conn’s, the furniture and home retailer, filed for bankruptcy last month and recently announced it would close over 500 of its stores, which account for more than 10 percent of the total number of retail closures Coresight has tracked this year. Other bankruptcies that required major store closings this year include Rue21, Express and 99 Cents Only Stores.
Cumulatively, those three bankruptcies saw the closure of over 900 stores, or about 20 percent of the total store closures this year.
At the moment, Harmon said, Coresight does not have plans to revise its 2024 projections. Though the bankruptcies have caused a surge in the number of closures for the year, Harmon said the coast is far from clear for retailers not affected by looming money problems.
Even as many continue to downsize from being overstored, new challenges continue to arise, he said.
“There are several pressures on retailers. One, consumers are watching their budgets and economizing. There’s always a threat from e-commerce, but there are new threats, new competition from Shein and Temu in apparel that’s even caused Amazon to take notice and talk about direct-from-China products,” he said. “And then, of course, you have social media. Gen Z is a big user of TikTok; that’s where they get their inspiration. Shopping on social media is gaining share. It’s attractive—it’s right, it’s right there, where you’re looking.”
Among companies that have not filed for bankruptcy, those that have decided to close the greatest number of stores in 2024 include Family Dollar, with 620 projected closures; CVS, with 315 closures on the horizon and Big Lots, with 302 closures coming.
Even as those stores close, discount stores like Dollar General, Five Below and Dollar Tree continue to pop up, with those companies opening 754, 227 and 165 stores this year, respectively.
Harmon said part of the reason those companies are able to open new stores is consumers’ interest in value shopping as dollars remain tight. Though several discount store companies have seen success, discount store closures still outpace discount store openings by a bit.
Harmon said that’s likely attributable to the high number of stores Family Dollar had to close, and not necessarily reflective of the discount industry itself. Still, he noted, dollar and discount stores will have to keep their guard up as they work to compete against industry behemoth Walmart, which offers consistent low prices to consumers. Walmart is slated to open 30 stores this year, according to Coresight.
Dollar and discount stores won’t be the only ones having to get clever to differentiate themselves and capture consumer foot traffic, particularly as retailers gear up for the coming holiday season.
“We’ve been talking about the retail experience for years—not just offering a commodity or a transaction, but offering something that’s a pleasant experience for the consumer, [like] a good loyalty program, or activities in the store, having enough associates,” he said.
Technology, too, can help brands and retailers future proof their stores, Harmon contended. Artificial intelligence has already begun to help retailers allocate inventory into stores, personalize consumers’ experiences and more. Many consumer-facing AI use cases have been confined to e-commerce, though other technologies continue to serve retailers steadily as many stand on unfamiliar ground with AI systems and their implementation.
In particular, RFID, which can help associates locate items in a store, can streamline in-store experiences and keep customers visiting stores.
“[RFID] is good for associates, because they don’t have to go and search through piles of stuff to find an item; it’s good for customers because associates find it faster, and retailers know what inventory is in the store. That’s important for buy online pickup in store, curbside pickup [and] online inventory counts. You don’t want to go to a retailer’s website and it says they have five of what you’re looking for, then you go to the store and they have zero,” he said. “Consumers want to make fewer, more targeted shopping trips, so it’s really important for the stores that they do visit to have everything they need.”
