News: Retail Closures Dip as Pandemic Continues
Despite the COVID-19 pandemic remaining an issue, brick-and-mortar retail store closures are down by more than 60% in 2022.
Contributing Writer at Tally
February 18, 2022
We’ve recently seen massive retailers like Toys” R” Us and Payless liquidate and close their stores. Despite this, 2021 saw overall retail growth as new store openings slightly outpaced closures.
This growth trend appears to be continuing into 2022, as new data shows store closures are down 65% through the fourth week of January compared to the same time frame in 2021. So far this year, we’ve seen only 742 store closures.
Below, we’ll analyze the resilience of retail and how this may affect consumers.
Store openings continue outpacing closures
In 2021, we saw 4,795 store closures compared to 5,048 new store openings, driven by consumer demand, a growing economy and financial support from the government in the face of COVID-19.
In 2022, that trend has continued, and it’s accelerated. To date, there have been 1,910 new store openings. That’s a 3% gain compared to the same time frame in 2021. This is a shift from the late 2010s to 2020, when store closures happened at an alarming rate.
Discount giant leads the rush
Dollar General — a discount store — plans to make up 1,102 of those estimated openings, more than every other retailer. This will follow the incredible 1,039 new stores Dollar General opened in 2021.
Dollar General executives hint its growth is far from over. They've mentioned the ability to add another 17,000 stores to its almost 18,000-store footprint.
Dollar General isn’t the only retailer planning a brick-and-mortar growth spurt in 2022. Other discount retailers expecting significant growth include Burlington Stores, Big Lots and Citi Trends. Windsor Fashions and Signet Jewelers also expect to be growth leaders in 2022.
Is this the end of the online retail boom?
Online shopping has been hot in the U.S. since 2018, and the COVID-19 pandemic certainly helped. Does this sudden shift to fewer store closures mean the online boom is cooling?
Likely not. What we’re seeing is growing consumer demand filling retailers’ coffers. There’s still plenty of consumer cash to funnel into the online channels, so there’s room for growth.
Plus, many retailers now have online and brick-and-mortar, and the latter fuels online shopping. These retailers see a 50% average decline in online sales when they close a physical location. So, it's beneficial for companies to balance their physical locations and online presence.
How the brick-and-mortar growth impacts consumers
Initially, more stores mean more competition and lower prices, especially as discounters like Big Lots and Dollar General enter new markets. This could help lower prices temporarily, especially as inflation cools off after surging amid the pandemic.
However, it’s hard to say what the long-term effect will be. If companies find a way to leverage the physical locations to aid online sales, it could give consumers flexibility and savings. For example, a shopper can try clothes or test products before buying them online. A local store could also help shoppers save money by offering free online pickups and returns to save on shipping costs.
Will these trends continue?
While these predictions and goals are great in the first quarter of the year, there’s still a lot of 2022 remaining. For now, we can enjoy the predictions of fewer closures and more openings, but the true numbers won’t show themselves for a few more quarters.