Store closures are up 69% this year—and more are on their way

The data point: US retailers shuttered more than 7,100 stores in the first 11 months of the year, a 69% YoY increase, per Coresight data cited by CBS News.

Zoom in: There are a few common threads across the retailers that closed hundreds of stores.

• Retailers catering to lower- and middle-income shoppers stumbled as financially strapped consumers tightened their budgets. Family Dollar (677 locations), Big Lots (580), Conn’s (553), 99 Cents Only Stores (371) all felt the squeeze.
• Pharmacies and convenience stores struggled as consumers shifted to lower-priced competitors like Walmart, Costco, and Ulta Beauty. Pharmacies’ margins also shrank under pressure from pharmacy benefit managers and waning demand for pandemic-era staples like tests and vaccines. Major chains like CVS (586 locations), Rite Aid (408), 7-Eleven (492), and Walgreens (259) all closed underperforming stores.
• Mall staples shrank their footprint amid shifting shopping patterns. As Class A malls rebound, Class B and C malls lag behind. These struggles drove rue 21 into bankruptcy (closing all 543 of its stores) and led Foot Locker (124), Express (105), and Macy’s (55) to adjust their store mix.

Looking ahead: More store closures are coming.

• Advance Auto Parts will shutter 523 stores and 204 independent locations to shore up its bottom line after it reported another disappointing quarter.
• Macy’s will close about 15 locations after the holiday season after already shuttering 50 stores this year. Its turnaround strategy includes shuttering 150 stores and focusing more heavily on luxury and beauty.
• Reports that Walgreens may sell itself to private equity firm Sycamore Partners could prompt the struggling chain to shutter even more locations—it’s already planning to close 14% of its US stores over three years.
• Two other floundering merchants, The Container Store and Party City, may soon file for bankruptcy, likely leading to store closures as well.

Our take: The surge in store closures comes despite solid retail performance. We expect retail sales to rise a solid 2.8% YoY this year and ecommerce sales to grow 8.1% YoY.

However, even in strong markets, unremarkable brands without a clear value proposition will struggle—a challenge magnified by the current environment in which consumers are spending cautiously.

Go further: Read our analysis of Macy’s and other major retailers’ Q3 results in our Retail & Ecommerce Earnings Q3 2024 report.

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