Store Closing Sale, Small Retailer
There Are Fewer Store Closings Than Projected in 2009
Nov/11/2009 10:58
There
is one bright spot for retailers in this year of bad
news and that is the fact that, contrary to most
expectations, store closings have not reached the
disastrous levels many were predicting. In fact, in
the first half of 2009, there were fewer store
closings than during the same period in both 2008 and
2007.
Year-to-date, there has been close to 4500 store closings according to ICSC (International Counsel of Shopping Centers). That would put 2009 on pace with 2006, when a total of 4,730 stores closings. The number of closings is far short of the 10,000 to 12,000 closings experts projected.
Some experts are seeing the fewer-than-expected closings as a sign that the worst is over for the industry, especially given the broader economic stabilization that has emerged in recent months. But a number of retail consultants experts
contend that many underperforming stores were kept in business this year thanks to rent relief measures granted by their landlords, as well as a great deal of cost-cutting.
There are still reasons for concern, the national unemployment rate is now over 10 percent, and there are lackluster projections for the 2009 holiday shopping season, a period of paramount importance to retailers' annual sales. This holiday season will likely be the second worst in 42 years, with flat growth in same-store sales and a 1percent decline in total sales.
Many underperforming stores managed to stay open this year, in large part to the retailer’s successful efforts to secure rent reductions rather than to a better than expected sales results.
Excess Space Retail Services Inc.,a Huntington Beach, Calif.-based real estate disposition and lease restructuring firm, expects to see anywhere from 6,000 to 8,000 store closings in the first two quarters of 2010.
"At the end of 2008, we thought that 2009 would be a record-setting year as it relates to store closures, but something very different occurred, retailers were able to [use poor market conditions] to open up a dialogue with landlords to restructure leases to make it more feasible to operate under-performing locations," according to Excess Space’s principal Alvin Williams . "Retailers have really done all they can to keep their lights on in 2009, and we think in 2010, retailers that were unable to restructure their leases or continue to struggle in spite of restructuring" will close stores, he adds.
It looks as though the predictions for record store closings have just moved into 2010 and that most brick and mortar stores will continue to struggle.
Year-to-date, there has been close to 4500 store closings according to ICSC (International Counsel of Shopping Centers). That would put 2009 on pace with 2006, when a total of 4,730 stores closings. The number of closings is far short of the 10,000 to 12,000 closings experts projected.
Some experts are seeing the fewer-than-expected closings as a sign that the worst is over for the industry, especially given the broader economic stabilization that has emerged in recent months. But a number of retail consultants experts
contend that many underperforming stores were kept in business this year thanks to rent relief measures granted by their landlords, as well as a great deal of cost-cutting.
There are still reasons for concern, the national unemployment rate is now over 10 percent, and there are lackluster projections for the 2009 holiday shopping season, a period of paramount importance to retailers' annual sales. This holiday season will likely be the second worst in 42 years, with flat growth in same-store sales and a 1percent decline in total sales.
Many underperforming stores managed to stay open this year, in large part to the retailer’s successful efforts to secure rent reductions rather than to a better than expected sales results.
Excess Space Retail Services Inc.,a Huntington Beach, Calif.-based real estate disposition and lease restructuring firm, expects to see anywhere from 6,000 to 8,000 store closings in the first two quarters of 2010.
"At the end of 2008, we thought that 2009 would be a record-setting year as it relates to store closures, but something very different occurred, retailers were able to [use poor market conditions] to open up a dialogue with landlords to restructure leases to make it more feasible to operate under-performing locations," according to Excess Space’s principal Alvin Williams . "Retailers have really done all they can to keep their lights on in 2009, and we think in 2010, retailers that were unable to restructure their leases or continue to struggle in spite of restructuring" will close stores, he adds.
It looks as though the predictions for record store closings have just moved into 2010 and that most brick and mortar stores will continue to struggle.