How will store closures affect shoppers? What to know about prices, availability
Consumers are going to have fewer places to shop as in-person retail stores continue to close, but it remains to be seen whether shoppers will have less choice or have to pay more.
Last month, Joann became the latest retailer to announce it will shutter all of its stores as it was auctioned under new ownership. The retailer will close 800 stores nationwide.
That comes on top of other retailers announcing specific location closures, such as JCPenney, Macy's, Big Lots and Kohl's.
Store closures are still small in relation to all stores
Neil Saunders, a retail analyst at the research and analytics firm GlobalData, said that "while there will be store closures this year, the number closing is a small fraction of the total number of physical stores. So, consumers will still have plenty of places to shop and plenty of choice."
On a net basis, as of last month store closures are about on par with store openings for the year, said Mark Matthews, executive director of research for the National Retail Federation.
Holiday sales were strong and 4% above the retail group's projections, reaching a historical high, Matthews said.
Matthews said he can't discuss any specific retailers' closures, but retailers close for various reasons, which could be a reflection of demographics around a particular retailer or competitive dynamics in the industry.
"I don't think that people are buying less of what the stores sell. They're just buying it in different places," he said.
The U.S. is the most over-stored country, with "more stores than we've ever had before on a per capita basis." But there is a seismic shift happening as consumers can now go to a store in person or buy through e-commerce.
Similarly, Michael Prendergast, managing director in global professional services firm Alvarez & Marsal’s consumer and retail group, said the U.S. retail environment has been in an expansion mode for decades. But we are now seeing the disruption to the brick-and-mortar model brought by e-commerce, which gives consumers many different access points for their goods, he said.
Prendergast said, however, that he still believes U.S. consumers "gravitate towards brick and mortar in an experiential experience," so the competition among stores has increased exponentially.
Will stock and availability be affected by store closures?
Consumers in the short run will not have the same amount of choice as stores close, Prendergast said. But in the long term, it will be up to competitors to decide what type of offerings they want to pick up from stores that have gone out of business, he said.
Some consumer groups, such as the elderly, who favor brick and mortar shopping or people without reliable internet access, will be disproportionately affected by closures, said Douglas Bowman, a marketing professor at the Goizueta Business School at Emory University in Georgia.
The large number of planned closures by Walgreens and CVS, for instance, have created "pharmacy deserts," said Bowman, who researches consumer behavior and brand and product management.
Fewer physical stores may also mean it is harder to find an infrequently purchased product right away and longer wait times to buy it online and receive it, Bowman said.
Bowman added, however, that retailers like Amazon and Walmart may see an opportunity to keep strengthening their e-commerce logistics to offer more products with store closures.
Will prices be affected by store closures?
Prices could be affected in two ways, Prendergast said. U.S. retailers are a highly promotional environment, so retailers who have competitors that have gone out of business may think "we don't need to be as promotional" in offering deals, he said.
But online retailers may keep that pressure on retailers to hold prices in check, he said.
Bowman similarly said retailers could raise prices because of reduced local competition, but prices also could hold or even decline since e-commerce makes price comparisons easier for consumers.
Saunders does not believe store closures will "lead to a spike in prices because competition is very healthy. Even in a sector like crafts, you have Hobby Lobby and Michaels, which compete with each other and with online giants like Amazon and generalists like Walmart."
"Most consumers like using a mix of online and physical stores, and I don’t see this dynamic changing all that much," he said.
How many stores are going to close this year?
At least one firm is predicting the number of store closures this year to double last year's.
A total of 7,325 stores closed in the U.S. in 2024, according to Coresight Research, a research firm specializing in retail and technology. It was the highest number since Coresight recorded 10,000 closures in 2020, as reported by Paste BN.
Coresight is projecting that 15,000 stores will close this year, offset by 5,800 stores set to open.
Mary Walrath-Holdridge contributed to this story. Betty Lin-Fisher is a consumer reporter for Paste BN. Reach her at blinfisher@USATODAY.com or follow her on X, Facebook or Instagram @blinfisher. Sign up for our free The Daily Money newsletter, which will include consumer news on Fridays, here.