NEW YORK – New figures from the US show a startling rise in store closures so far in 2019 – and the apparel sector is leading the way. The US has already seen more than 7,500 store closure announcements by major retailers in 2019, as of July 31, already up from 5,524 closures in the full year 2018. Apparel specialist stores lead the casualty list with 2,750 closures announced so far in 2019. The figures mirror broader trends around the globe as apparel retailers shift business online. They also hint at recessionary concerns: the Federal Reserve’s most recent recession probability model showed a 31.5 per cent chance of a recession in the next 12 months. This is slightly higher than it was in July 2007, prior to the global financial crash in 2008.
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The latest figures, from Coresight Research, show that of announced closures for the year so far, apparel is the sector that has been most impacted, accounting for 36 per cent of total closures (14 per cent in 2018) in the US, followed by footwear specialists at 28 per cent (8 per cent in 2018) and general merchandise stores at 14 per cent (just 2 per cent in 2018).
Among apparel specialist stores, Gymboree declared bankruptcy in January and shut 749 US stores. Ascena Retail Group announced in May that it would wind up its Dressbarn business and shut down all its 661 stores, while Charlotte Russe declared bankruptcy in February and announced it would shut down its store estate of at least 500 stores.
Charming Charlie filed for bankruptcy in July and announced it would shut all its 261 stores. These four retailers accounted for 79 per cent of total announced closures recorded so far this year in the apparel space.
Among growth within the apparel sector store space, off-pricers Ross Stores and Burlington are leading the pack, having announced plans to open 100 and 50 stores, respectively.
We expect more closures of physical apparel stores globally moving forwards. Certainly in the UK, many mid-sized apparel retailers – primarily department stores – have been somehow hanging on and finding different ways to restructure. But we are reaching the stage where most have now exhausted all their options. A global recession would surely tip them over the edge.