Store closings are expected to hit a five-year low. But it’s not all good news
Last year, a record 12,200 stores closed, according to CoStar, as the pandemic pushed consumers to limit their visits to stores.
This brought much needed relief to some struggling retail stores who were able to secure more favorable rent terms from desperate landlords looking for tenants.
“There is less pressure to close,” said Ken Fenyo, president of retail research and consulting firm Coresight Research. “You are seeing a strong return to stores. People are spending and starting to go out. It suggests that retailers close fewer stores than they have and try to take advantage of it.”
“Now is the right time to strike a rental deal,” he added, and some tenants have been able to negotiate more flexible terms with landlords to avoid the closure.
A “big joker”
“He’s definitely a big wild card as we head out until the fall and the holiday season which we can’t really explain, “Fenyo said.” If things went wrong and we saw the variant really starting to have an impact on sales, we would expect a slight increase in closures. ”
In the long run, the continued growth in online shopping may also mean that chains need fewer stores than before.