Retail chains are closing nearly 3,200 stores across the United States this year, a 24% increase from the same period last year, according to a recent survey by CoreSight Research. The closures reflect ongoing struggles within the industry, driven by factors such as bankruptcies, inflation, and rising incidents of shoplifting.
The significant uptick in store closures highlights the challenging economic landscape for brick-and-mortar retailers. Many companies have cited the prohibitive costs of maintaining physical locations amidst these financial pressures. Organized retail theft rings have further exacerbated the problem, posing serious challenges for both large retail chains and smaller businesses.
A shift in consumer behavior toward online shopping, particularly on platforms like Amazon, has also contributed to declining foot traffic in physical stores over the past two decades.
Notable among the closures, RiteAid and the clothing retailer Rue21 have declared bankruptcy. Rue21, citing inflation, announced plans to lay off all 4,900 of its employees and close numerous stores. RiteAid is set to close 165 stores this year. The CoreSight report indicated that drug store and pharmacy closures have resulted in about eight million square feet of retail space becoming vacant.
Dollar Tree has announced plans to close more than 600 Family Dollar locations due to inflation and shoplifting, marking the largest number of closures by any retailer this year. Additionally, Tupperware will close its only U.S. factory in South Carolina, laying off 148 workers and shifting production to Mexico.
Other retailers closing a significant number of stores include 99 Cents Only Stores (371 stores), CVS (315 stores), 7-Eleven (272 stores), Express (105 stores), Walgreens’ parent company (77 stores), and Macy’s (51 stores). Stores closing under 50 locations include Sleep Number, Burlington, Foot Locker, Carter’s, Abercrombie & Fitch, Big Lots, Dollar General, H&M, Best Buy, and Ross.
Despite these closures, some retail chains are expanding. Dollar General plans to add over 800 new locations this year, 7-Eleven aims to open more than 270 new stores, and Five Below is set to open 227 new stores.
The economic strain on American consumers is evident as inflation continues to impact the cost of everyday necessities such as food, gas, and housing. Prices have surged 20% since January 2021. Although inflation has decreased from its peak of 9.1% in June 2022, it remains high at about 3.3% as of last month, still above the Federal Reserve’s target of 2%.
The wave of store closures underscores the broader challenges facing the retail industry as it navigates economic turbulence and shifts in consumer preferences.
