“The main factors driving the closure of retail outlets are:
1. Rise of e-commerce and online shopping: The continued growth of online retail sales is leading to a decline in physical store sales, prompting retailers to close underperforming locations.[1][2][3] For every 1% increase in e-commerce penetration, around 8,000 stores need to close.[3]
2. Oversaturation of retail space: The U.S. has too many retail stores and square footage compared to demand, leading to closures as retailers optimize their physical footprints.[4] Around 45,000 more stores may close by 2028 as retailers shift to using stores for fulfillment and distribution.[4]
3. Shift in consumer spending habits: Consumers are spending more on services like travel and dining out instead of goods, impacting retail sales and leading to store closures.[4]
4. Restructuring and bankruptcies: Major retailers like Bed Bath & Beyond, Foot Locker, and Sally Beauty have announced significant store closures as part of restructuring efforts or bankruptcies.[4]
5. Remote work trend: The rise of remote work has reduced foot traffic and spending in urban downtown areas, leading retailers to close stores in these locations.[2]
6. Operational costs: Higher costs of rent, labor, and other operational expenses are making some physical locations unprofitable for retailers.[4][1]
In summary, the growth of e-commerce, oversaturation of retail space, changing consumer habits, restructuring efforts, remote work trends, and rising operational costs are the primary drivers behind the accelerating pace of retail store closures.[1][2][3][4]
