NEW YORK CITY — US retailers are closing stores at a staggering rate.
About 2,000 store closures have been announced just within the last six weeks, bringing the total number of planned closures this year to nearly 5,100.
That number is expected to keep growing, and reach more than 8,600 before the end of the year, according to Credit Suisse.
“Store closings have accelerated, even in tier-one markets,” Credit Suisse analysts wrote in a recent research note.
Major department stores such as Macy’s, JCPenney, and Sears are among those shutting down stores, along with retailers like Payless, Rue21, Michael Kors, and Bebe.
The closures are crippling hundreds of shopping malls across the US.
“This is a death spiral,” John M. Clapp, a professor at the University of Connecticut’s Center for Real Estate, told Business Insider. “Once a department store goes vacant that tends to be contagious because all those middle-mall stores — the nail salons and the jewellery stores — they are all depending on the traffic coming from the bigger retail stores.”
Credit Suisse expects 20% to 25% of malls — or roughly 220 to 275 shopping centres — to shut down over the next five years as a result of all the store closures happening this year.
As malls decline, the communities around them tend to follow suit.
“Retail jobs are lost and eventually tax revenues decline,” Clapp says. Ultimately, growing crime rates can become a problem for the surrounding area, as well.
Many local economies will be reeling from the effects of the closures for years, but they have been a long time coming in the US, where the amount of retail space per capita far outweighs any other country in the world.
The US has 23.5 square feet of retail space per person, compared with 16.4 square feet in Canada and 11.1 square feet in Australia, the next two countries with the most retail space per capita, according to Morningstar Credit Ratings.
Retailers that don’t close enough stores won’t survive through the upheaval happening in the industry right now, according to Credit Suisse.