73,000 retailers to to close in first 1/2 of 2009
For those of you who don't know, consumer spending makes up roughly 70 pct of the US economy, yet many consumers have been pulling back due to job insecurities, declining credit lines, falling wealth effect (caused by falling home values/cratering retirement plans) and overall general unease about the future. The end result of this pull back: Significantly declining retail sales - leading to numerous store bankruptcies and closings.
Dec. 29 (Bloomberg) (Article snippets below)
U.S. retailers face a wave of store closings, bankruptcies and takeovers starting next month as holiday sales are shaping up to be the worst in 40 years.
Retailers may close 73,000 stores in the first half of 2009, according to the International Council of Shopping Centers. Talbots Inc. and Sears Holdings Corp. are among chains shuttering underperforming locations.
“You’ll see department stores, specialty stores, discount stores, grocery stores, drugstores, major chains either multi- regionally or nationally go out,” Flickinger, managing director of Strategic Resource Group, a retail-industry consulting firm in New York, said today in a Bloomberg Radio interview. “There are a number that are real causes for concern.”
The ICSC predicts, using U.S. Bureau of Labor Statistics data, that 148,000 stores will shut down in 2008. That would be the largest number since 151,000 closings in 2001, during the last recession, according to ICSC Chief Economist Michael Niemira. The total number of retail establishments will decline by about 3 percent this year, also taking into account locations that were opened, he said. The U.S. had 1.11 million retail locations in 2002.
Another 73,000 locations may shut their doors in the first part of 2009, Niemira said.
My closing thoughts:
These store closings will create a self-perpetuating feedback loop - wherein more people will get laid off, which will lead to less consumer spending, increased foreclosures and credit card delinquencies, tighter credit conditions/less available credit - leading to more store closings, etc...