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US store closings have reached their highest level since the COVID-19 pandemic, according to the latest estimates.
As of November 8, retailers have announced the closing of 6,481 stores, an increase of 336 closings last week, according to the latest data from Coresight Research. Most of these closings were driven by American Freight, which is closing all 329 of its locations as part of its parent company’s bankruptcy proceedings.
Coresight also recorded 5,363 store openings this year as of Nov. 8, including 30 openings last week. However, closings still outnumber openings, a reversal from the trend of the past two years, John Mercer, global head of research at Coresight, told FOX Business.
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In 2021, closings outnumbered store openings by only 180, and in 2020, the gap was even wider, closings outnumbering store openings by nearly 6,000.
As of November 8, retailers have announced the closing of 6,481 stores, an increase of 336 closings the previous week, according to the latest data from Coresight Research. (Deb Cohn-Orbach Team/UCG/Universal Images via Getty Images)
Additionally, Coresight tracked 43 store bankruptcies this year, which is a sharp increase from the 25 bankruptcies recorded in 2023.
Mercer cited several macroeconomic factors that are hindering retailers. Although inflation has eased, consumers are looking at prices rather than the rate of inflation, making them more cautious about how they spend their money, Mercer said.
At the same time, high interest rates inhibited activity to some extent. If the seller carries any debt, the cost of that debt will increase because interest rates are considered much higher than in the past few years, Mercer said.
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“You see these pressures on both sides, and then you get some food costs,” Mercer said.
For example, retailers face high operating costs. Another challenge is the continued weakness in the housing market, which is causing fewer people to move. The lack of movement in the market affects high-ticket items such as furniture, home improvement, appliances and other electronics, he said.
A storefront sign outside Pottery World in Orlando. (Jeffrey Greenberg/Universal Images Group via Getty Images/Getty Images)
Macroeconomic pressures also have a disproportionate impact on low-income consumers, as seen in the companies most affected.
Mercer said prime examples of this are American Freight and Big Lots — stores that closed as part of Chapter 11 bankruptcy proceedings. Both companies are highly exposed to low-income consumers and a struggling housing market, he said.
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Big Lots included Chapter 11 bankruptcy security in September to facilitate the sale of “substantially all” of its assets to “horse bidder” Nexus Capital Management. It also announced plans to permanently close a number of stores.
“There are cases where… these negative things have really coincided and in some cases that’s compounded problems that retailers already have,” Mercer said.
In some cases, companies may not be in trouble, but they may need the right balance.
“I think some of the drug store closings fall into this category,” he said.
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