Store closing announcements up, along with retail bankruptcies

2023 continues to be a much tougher year for retailers
Patrick McKeever
NRF Contributor

In the first six months of calendar 2023, significant U.S. retailers announced plans to open about 3,420 new stores, down sharply from about 5,080 announced openings in last year’s first half, according to analytical work by The Daily on Retail, an investor-oriented consumer research platform. Retailers announced plans to close about 3,365 stores, nearly four times higher than the approximately 895 store closings announced in the first and second quarters of 2022.

In the first six months of calendar 2023, U.S. retailers announced plans to open about 3,420 new stores.

The drop in opening announcements and jump in closing announcements reflect the tougher consumer backdrop after two very good years with the benefit from pandemic-related stimulus in 2021 and excess pandemic savings in 2022, as well as the strong labor market in both years.

The labor market is still very healthy, with historically low unemployment and continued growth in wages. But inflation continues to reduce consumers’ discretionary income, spending has shifted from goods back to services, excess savings have been depleted somewhat, and there are still concerns about a recession as the Fed continues to raise interest rates to bring inflation down.

A number of marginal retailers that were “propped up” by stimulus and landlord concessions during the pandemic are now struggling financially as discretionary spending slows. That is well reflected in U.S. retail bankruptcies, which nearly tripled year over year in the first half to 16, including nine in the second quarter.

The highest-profile retail bankruptcies in the first half of the year included Bed Bath & Beyond, Party City, David’s Bridal, Rockport, Christmas Tree Shops and Tuesday Morning.

Store openings

Collectively, dollar stores, off-price retailers, discounters and warehouse clubs continue to open the most stores. They announced more than 1,300 openings in the first half, or nearly 40% of all announced openings.

Nearly 40% of all announced openings for 2023 were for dollar stores, off-price retailers, discounters and warehouse clubs.

That doesn’t even include Dollar General, which said in December 2022 it would open 1,050 stores in its fiscal 2023 and more recently trimmed its plan to 990 new stores, or Five Below, which said in March 2022 it would open 925-1,000 new stores by the end of its fiscal 2025.

Other retailers that announced large numbers of new stores in the first six months of 2023 include Foot Locker, which said at a March investor event it will open more than 300 off-mall stores by its fiscal 2026. Casey’s General Stores, which held its 2023 Investor Day in late June, announced plans to “add” about 350 stores through its fiscal 2026 — we assume about half will be new stores and half will be acquisitions. And Academy Sports + Outdoors said in the spring it will open 120-140 new stores by 2027.

Store closings

Store closing announcements were more widely distributed across retail in the first half. They were led by Bed Bath & Beyond, which had 600-plus stores at the beginning of the year and has now closed all of them. Tuesday Morning said it was planning to close all 487 stores, and Walgreens recently said it would close about 150 of its 8,800-plus U.S. stores and another 300 of its 2,200-plus Boots UK stores.

Others announcing large numbers of closings in the first half include Signet Jewelers, which said in June it would close up to 150 underperforming stores over the next 12 months, mostly at lease expiration and in traditional malls. Things Remembered said it would close all 130-plus stores, and Foot Locker plans to close more than 400 stores, as announced at the March investor event.

Methodology

Per The Daily on Retail’s methodology, openings and closings are specific numbers that have been announced, not completed, and could extend over several years. Also, The Daily on Retail’s tally excludes openings and closings that may be occurring in 2023 but were announced in 2022 or prior.

Patrick McKeever covered retail for more than 20 years as a Wall Street analyst before launching The Daily on Retail in 2019.

Related content

Census Sales Data Shows Consumers ‘Still Engaged’
 
default image
Data released by the U.S. Census Bureau shows retail sales cooled in January but that households continued to spend.
Read more
Store closing announcements up in 2023
 
A closing down sign displayed in a window.
Against a tougher consumer backdrop, 2023 was a challenging year for many retailers.
Read more
Lessons from market makers on leading with authenticity and innovation
 
Martha Stewart speaking at NRF 2024: Retail's Big Show.
NRF 2024: Insights from Martha Stewart, Chewy CEO Sumit Singh and Barnes & Noble CEO James Daunt.
Read more