Brick-and-Mortar Store Closures Expected to Hit 12,000 This Holiday Season
We’re diving headlong into the holiday season.
And that means one thing…
While Amazon (Nasdaq: AMZN) shows no signs of backing down from its e-commerce throne, retailers on the ground are telling a different story.
In 2017, the “retail apocalypse” began.
Brick-and-mortars struggled. Vacancies soared. And malls crumbled into decaying temples of days past.
That same year, U.S. retailers closed nearly 8,200 stores – the most closures in a year on record.
It exceeded the peak annual store closure count during the 2008 financial crisis by more than 30%.
But don’t believe for a minute that the retail apocalypse is over. Store closures are about to go into overdrive…
In fact, just through the first eight months of 2019, retailers closed 40% more stores than they did in all of 2018.
And they’ve already shuttered more stores than the record set in 2017.
It’s projected that by the end of the year, the U.S. count could hit a truly apocalyptic 12,000 closures.
It’s a new world order in retail, and the old names are dying off. Stores like J.C. Penney (NYSE: JCP), Sears Holdings, Toys R Us and Payless ShoeSource. The discount footwear outlet alone has accounted for 2,500 closures this year.
But investors shouldn’t fret. The extinction is all of the companies that couldn’t adapt.
They weren’t able to evolve and keep up with the shifting sands of time.
They were dinosaurs. And the meteors were e-commerce and the “Amazon effect.”
They all ignored the threat or shrugged it off – and now they’re dead.
I’ve been warning investors for years. And they don’t have to look much further than the performance of brick-and-mortar retailers versus that of online retailers to see this trend…
Year to date, the SPDR S&P Retail ETF (NYSE: XRT) has eked out a meager 5% gain.
Not only does that severely trail the S&P 500’s nearly 20% run so far in 2019, but it’s blown away by the more than 22% gain of the Amplify Online Retail ETF (Nasdaq: IBUY).
Leaner, nimbler online retailers continue to outflank their outdated competitors.
This is the time of year when retailers make the lion’s share of their money.
But brick-and-mortars will continue to rot on the vine because they can’t compete with e-commerce, even though it still accounts for less than 20% of all retail sales.
That means the extinction-level event we watched over the past couple of years will continue to pick up speed.
We’ll see new records in store closures… And only the strongest will survive.