As many as 25,000 retail stores may close this year due to the coronavirus pandemic, with a majority closing in shopping malls, further hastening the industry’s decline.
That number would dwarf the prior record of 9,800 retail closures set in 2019, according to a new report from the retail data firm Coresight Research.
First issued in March, the report estimated that 15,000 stores could close in 2020, but as the reach of the coronavirus grew across the country, governments required many stores to close temporarily and shoppers were discouraged from venturing out.
For some businesses, those temporary closures may hasten the transition to digital commerce, or they may become permanent.
Coresight’s CEO Deborah Weinswig said in the report that the closure of department stores and large clothing retailers — so-called anchor stores — represents a particular threat to malls.
Already, 15 national retailers including Bed Bath & Beyond, H&M, Century City, AMC Theaters, Regal Cinemas, Party City and The Gap, have elected not to pay May’s rent. The company Macerich, which owns 47 shopping malls across the U.S., said it “collected about 26 percent of rent” owed by tenants in April, and sported a similar number as of mid-May.
Simon Property Group, the nation’s largest mall owner, sued The Gap last week for $66 million in unpaid rent across its properties. The mall giant this week also exited a $3.6 billion deal to acquire up-market mall operator Taubman, known in the industry for its quality anchor tenants.
Neiman Marcus, J.C. Penny, J.Crew, and Victoria’s Secret have gone beyond closing stores and filed for bankruptcy. The Mall of America has fallen behind on its $1.4 billion mortgage, exposing the wider bond market to systemic risk.
If damage done to the retail sector by coronavirus has been deep, any return to health will be slow and grinding. Anonymized cell phone data shows that foot traffic in malls that have reopened are just a quarter of what they were in January 2020, suggesting that the Coresight report correctly predicts many more closures ahead. [Bloomberg] – Orion Jones