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Retail Store Openings Are Outpacing Store Closings

According to IHL's Retail Renaissance - True Story of Store Openings/Closings, for every retailer closing stores, five retailers are expanding and opening new stores. "U.S. retail has increased $565 billion in sales since January of 2017, fed not just by online sales growth but net store sales growth," states Lee Holman, VP of research for IHL. "Clearly there is significant pressure in apparel and department stores; however, in every single retail segment there are more chains that are expanding their number of stores than closing stores." IHL reviewed 1,660 retail chains with 50 or more locations across 9 industry segments in the US for the study. The report agrees with the consensus that the main drivers of the chains closing the most stores are too much debt, rapid overexpansion, stale innovation, and private equity pressures. However, when stores close, the report asserts that it is driven by challenges individual retailers face more than a shadow cast over the entire retail industry.  Consider these survey results:

  • 56% of retail chains have added stores in 2019

  • 20 retail chains represented 52% of all store closings in 2018

  • 20 retailers announcing the most store closures in 2019 represents 75% of all closures

  • Since 2017 apparel and department store chains have closed 9,651 stores; all other retail segments combined have opened a net of 18,226 stores

  • 64% of the retailers in the study are increasing their store count; 12% are decreasing; 24% are making no changes

  • The number of chains closing stores has dropped to 12% from a 2018 peak of 37%

Today is considered good economic times so it should come as no surprise that certain retailers and retail segments are expanding. However, as the market inevitably turns, tariffs take hold, and business investment continues to curtail, retail will continue to be in the crosshairs. Like the ebb-and-flow of the use of the "retail apocalypse" moniker, store expansions can turn on a dime as conditions continue to evolve.   

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