The Download: A record 12,200 U.S. stores shuttered in 2020—amounting to 159 million square feet of retail space—as the coronavirus pandemic disrupted everyday life in drastic ways, according to a new report by commercial real estate firm CoStar Group. Big-box retailers such as Pier 1, Macy’s, and Gap were among the biggest culprits.
Why It Matters: The combination of Covid-19 and e-commerce trends have created a stark dichotomy between winners and losers. Online shopping reached a record high of around $800 billion, about a 32 percent increase year over year, during the pandemic, benefiting retailers like Walmart, Target, and Costco. Other stalwarts haven’t fared as well: the growing list of bankruptcies, another record this past year, includes big names such as J Crew, Neiman Marcus, and Brooks Brothers, among others. In fact, department stores, clothing chains, and companies with a significant presence in malls account for one-third of all closings.
In Their Own Words: “This movie is not finished. I suspect we’re going to see more closings throughout 2021,” says Macy’s CEO Terry Lundgren. “We’ve been an over-stored country for more than a decade. It’s been something we’ve been working to try to slowly and gradually correct but frankly, we have too many physical stores. There had to be a contraction; it’s just aggressively accelerated here in the last year.”
Surface Says: As the old adage goes, necessity is the mother of invention. We’re optimistic that the future of physical retail will be one filled with innovative ideas and experimentation, even if it’s more niche.