It is no secret that the pandemic has been hard on businesses, and experts predict that it will not necessarily get better any time soon. The former CEO of Macy’s, Terry Lundgren, talked to CNBC and said that he expects more stores to close in 2021. According to Lundgren, those retailers that do hang on will eventually have the chance to regrow.

His Predictions

Lundgren predicts that the disruption to retail from coronavirus will continue at least well into 2021. He made this prediction in late 2020 before the holiday season was over. At the time, Lundgren said that retailers would have a better idea of their situation after the holidays.

To put it in perspective, as of late December, over 11,000 retail locations had closed in 2020. One of the big factors was the increase in online shopping.

Lundgren also pointed out that the pandemic was not the only reason for store closures. While it was a significant factor, Lundgren also feels that the country had too many stores. He said this has been the case for over a decade and had to reduce at some point. The last year accelerated the process.

Retailers Are Unlikely to Get Relief

According to Lundgren, the biggest issue is that retailers struggling in December were not going to receive relief in January. They will still have expenses after the holidays, but the sales volume will drop.

There is also the factor of the stimulus check. At just $600, it is not enough to give most Americans peace of mind, let alone enough comfort for discretionary spending.

Those That Survive Will Have an Opportunity

While 2021 will likely be tough for retailers, according to Lundgren, the stores that make it will have the chance to start growing again. He predicts that they only need to hold on for another six months or so. Once the market starts to pick back up, the remaining retailers can take some of the business from the now-closed stores.

Predictions From Other Experts

Others in the industry, such as Chris Hudgins from S&P Global Market Intelligence, feel that the future of the retail sector largely depends on COVID and the vaccine. If the vaccine gets things under control quickly, people will shop more, and retailers will feel less of a strain.

Based on its analysis, Yahoo! Finance listed the stores at a higher risk of closures in 2021. The list includes JCPenney, Sears, Kmart, Rite Aid, Party City, Jo-Ann Stores, Neiman Marcus, Thursday Morning, and Christopher & Banks.

Sources:

https://www.cnbc.com/2020/12/21/ex-macys-ceo-lundgren-expects-retail-closures-to-persist-into-2021.

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