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Five Retailers Opening Stores for Every Retailer Closing Stores

Franklin, Tenn. — More than five retail chains are opening stores for every retailer that is closing stores in 2019, according to new research from IHL Group. This is up from 3.7 in 2018. The company also reports that the number of chains adding stores in 2019 has increased 56%, while the number of closing stores has decreased by 66% in the last year.

Retail Renaissance – True Story of Store Openings/Closings” reviewed 1,660 retail chains with 50 or more locations in the United States across nine industry segments. For each retailer, the company measured the total store counts at the end of 2016, 2017, 2018 and plans for 2019 year-end based on company filings and statements. The net total increase or decrease in their store count was noted and that data was tallied across companies.

IHL reports that fewer retailers make up the bulk of closures in 2019. In 2018, 20 chains represented 52% of all stores closed. In 2019, the 20 announcing the most closures represent 75% of all closures.

“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,” says Lee Holman, vice president of research for IHL Group. “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.”

Since 2017, apparel and department store chains have seen the net closure of 9,651 stores. During this same period, all other segments represented 18,226 net new openings. Additional findings include the following:

– Food/Drug/Convenience/Mass Merchants: +9.5

– Apparel, Hard Goods, Department Stores: +3.7

– Restaurants, Fast Food, Table Service: +6.3 chains opening vs closing stores

 

According to the research, the two primary characteristics of chains closing the most stores has been too much debt and rapid over-expansion driven by historically low interest rates for the last 10 years. Lack of innovation and short-sighted private equity has also played a significant role in many of the chains. Retailers without these characteristics have continued to thrive in this market, noting that when a retailer closes a lot of stores, it is more of an indictment on the individual retailer rather than an overall retail industry problem as has often been reported.

Only two industries — apparel and department stores — show a net decline in stores among all the retailers in the segment.

IHL Group is a global research and advisory firm headquartered in Franklin, Tenn., that provides market analysis and business consulting services for retailers and companies that market to the retail industry. For more information, visit www.ihlservices.com.

 

SOURCE: IHL Group

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