Amid a string of retail bankruptcies, retail store closures have outpaced openings so far this year — the first time that has occurred in two years, a new report by analytics firm Coresight Research found.
The data marks a potential adjustment in the number of retail venues open across the nation, said John Harmon, an analyst at Coresight.
“It’s not a retail apocalypse, but the U.S. has too much retail space,” he said. “That needs to correct itself.”
According to the Coresight report, there were 4,666 retail closures so far in 2024, compared to 4,528 store openings, meaning there were 138 more closures than openings.
Story continues below photo gallery
Big Lots is closing one store in New Jersey, in Woodbridge. Up to 600 Family Dollar stores across the U.S closed in 2024, according to an announcement earlier this year. Stop & Shop is closing 10 stores in New Jersey.
Pharmacy chain Rite Aid has closed more than 40 stores in New Jersey since filing for bankruptcy last fall. Bob’s Stores closed its one New Jersey location, in Freehold.
“We are currently in a phase where a lot of retailers are rationalizing their store networks," said Neil Saunders, a retail analyst and managing director of retail at GlobalData. "There have also been a number of retail bankruptcies. Both things are pushing up store closures.”
Investment firm UBS estimated in April that 45,000 retail stores could close over the next five years
“The retail sector has too many stores,” the report reads. “Store consolidation would favor the large, well-positioned players at the expense of the marginal and poorly positioned player.”
Blame inflation and high interest rates
In large part, blame inflation, said Harmon. The Federal Reserve hiked interest rates 11 times between 2022 and 2023 in a bid to tame inflation, which rose to a 40-year-high in 2022. This month, the Federal Reserve has signaled a possible rate cut in September.
With higher interest rates, “any debt that you refinance, you’re going to have to pay more,” Harmon said.
“It can be a factor behind bankruptcies,” he continued. “If you have a high debt level, it’s going to take a lot of cash to service that debt.”
The high interest rates have touched upon virtually every aspect of the economy. Cars are more expensive to buy and finance . New construction has slowed down as developers struggle to secure financing.
Mortgage rates for home purchases are only just starting to ease . The 30-year mortgage rate was 6.46% as of Aug. 22, according to Freddie Mac .
A recent Bankrate survey found that more than half of respondents are waiting until rates hit below 6% before buying a new home.
Online shopping accounted for only 16% of total sales
Not all has been gloomy for retail in New Jersey. Chains such as Express , Party City and Joann fabrics and crafts have all survived their bankruptcies.
Nationwide, online shopping, despite all the headlines it’s generated, only accounted for 16% of total sales during the second quarter, according to the U.S Census Bureau .
“Let’s look at COVID: Everybody was shopping online," said Matthew Harding, chief executive officer of Levin Management Corp., a North Plainfield-based commercial services firm. "People had to adapt to even shopping more online. If something was going to kill brick-and-mortar, that would have.”
Daniel Munoz covers business, consumer affairs, labor and the economy for NorthJersey.com and The Record.
Email: munozd@northjersey.com ; Twitter: @danielmunoz100 and Facebook
This article originally appeared on NorthJersey.com: State of retail: More store closings than openings this year as industry adjusts
Local News
