This holiday season is about to be rather rough in 2024, as per many of the major retailers in the United States. The store closures seem to reach quite a great high as the forecasts indicate more than 7100 altogether, closing doors by the end of November, which is an astounding 69% rise over the same period in 2023, as reported by the research firm CoreSight. Also, for this year alone, 45 retailers filed for bankruptcy protection, unlike the previous year in 2023, which had only 25 retailers.
Although there is still overall strong consumer spending on which the economy has improved, consumers are getting choosy, informed by the effect of inflation, to come up with what they will buy when they prioritize their spending for value, sales, and other incentives. Therefore, it could be that some retailers excel against this trend, such as Walmart, while other retailers struggle. For example, recently, Target reported disappointing earnings, whereas other chains like Family Dollar and CVS Health are noted to be closing lots of stores to adapt to changing customer demands.
“There really isn’t enough growth in the retail market for every player to thrive,” said Neil Saunders, an analyst with GlobalData, in an interview with CBS MoneyWatch. “The chains that are closing stores are facing issues that go beyond the economy. Their offerings may not align with consumer preferences, or they are not very successful solving their competitive threat.”
Retail chains hit hard: Who’s closing doors?
According to CoreSight, discount chains and drugstores have accounted for the bulk of store closures. Drugstore closure, in particular, has been one of the most chronic problems, with a reported closure of over 7,000 since 2019, according to the University of Pittsburgh. Some parts of the U.S. now feature “pharmacy deserts,” which means that residents do not have enough access to prescription medications and health-related products.
The Family Dollar discount retail outlet has been the worst affected by this. While the sector itself enjoys the overall growth figures that Dollar General and Dollar Tree will post in new store openings in 2024, Family Dollar has been unable to attract budget stock shoppers to its stores. As Neil Saunders said in a December 4 report, “Family Dollar’s sterile environment and uninspiring offer pushed it away from its consumers.”
While some closures are due to bad economics, other closures are due to continued operational or strategic failures. For example, some chains fail to keep up with e-commerce trends close to the changing demands of consumers. That has been further problematic, and some companies are in the process of restructuring or shutting down altogether.
What’s ahead for retail?
However, while experts hope for stabilization in the retail landscape by 2025, there are still expected closures much before that, a result of streamlining efforts by these merchants to purge the financial weight they have carried for years due to the pandemic and changing consumer behavior.
Read more: Walmart’s full Christmas dinners at just $5 per person – Here’s the most anticipated menu for the holidays in 2024.
“This is a year of change after long years of cataclysm,” said Sanders about the impacts during this period. “Retail bankruptcies go around in a cycle, and we’re in a downturn right now.”
For shoppers, however, this means fewer sources for everything from essential goods to services in an already thinly served community with pharmacy and grocery store shortages. Some chains have found creative ways to adapt; others face existential challenges.
The holiday season, most particularly, may not bring the proverbial resounding relief that these retailers so much desire at the moment, but rather reminds them of the growing churn in the retail landscape and the urgency for adaptation—if not, they’ll be the next casualty in the new wave of closures.
