The Real Reason Behind the Surge in Store Closures
If you’ve noticed that many retail locations are closing in your area lately, congratulations: you’re paying attention. 2024 has been a brutal year for some big brands. This week, Walgreens announced it will shut down 1,200 stores over the next three years. Just the other day, the last full-sized K-Mart in the U.S. closed its doors. And avid DIYers will know that LL Flooring (formerly Lumber Liquidators) recently declared bankruptcy and revealed plans to close all of its physical locations.
In total, more than 2,000 retail locations across the country will be closed by the end of the year. But why has 2024 been such a bad year for some retailers, and is this downward trend expected to continue? To find out, let’s first examine the case of Lumber Liquidators and see what exactly is causing these business woes.
Why is LL Flooring Closing Locations?
In early September, LL Flooring was in troubleso much trouble, in fact, that the brand filed for bankruptcy and announced to the world it would be closing its 400 stores in the United States. The reason for the bankruptcy is quite simple: the company simply isn’t liquid enough to keep operating, and at a certain point, it looked like all of its physical locations would have to be shuttered.
Then, an angel appeared an angel investor, that is. A few days after the bankruptcy went public, the company’s founder, Tom Sullivan, stepped back into the picture. Through his private equity firm, F9 Investments, Sullivan purchased 219 of the LL Flooring locations set to be closed. Sullivan has promised a “back to basics” approach he hopes will revitalize the business and doubled down on this point by announcing the company would be returning to its original name: Lumber Liquidators.
Even with this investment, 211 LL Flooring locations are still set to close by the end of the year.
Why Retail is Hurting
Obviously, when it comes to so many diverse businesses and products, the specific reasons retailers are struggling can be hard to pinpoint. The main culprit impacting every brand, though, is inflation. “Inflation is really having an impact,” b “People are shopping, they’re spending their money, but they’re often going for the essentials. And when they do want the extras, they’re going where they can get the best deal or where they can have the most fun experience. All of those factors are contributing to some retailers doing really well and some really struggling.”
2024 Store Closings and Beyond
But how long is this retail slump going to last, and could it be indicative of a larger and more concerning trend? Brandon Svec, national director of U.S. retail analytics for CoStar Group, doesn’t think it’s time to hit the panic button yet.
“It’s not, in my opinion, a resumption of the retail apocalypse that we saw in 2018, 2019, 2020 where we were seeing so many stores closed,” Svec told CoStar News. “There are still a substantial amount of tenants from a broad range of sectors looking for space. And the longer-term imbalance between the space needed in retail and the space that we have, I don’t think has shifted.”
Sources:
- CoStar.com, “US Store Closings Outstrip Openings in Break From Past Two Years” 2024
- CBS Morning Plus, “Why Major Retailers Are Closing Stores” 2024
- USA Today, “LL Flooring, formerly Lumber Liquidators, closing all 400-plus stores amid bankruptcy” 2024
- USA Today, “LL Flooring changing name back to Lumber Liquidators, selling 219 stores to new owner” 2024
- Al.com, “Retail closures in 2024: Walgreens, CVS, Walmart, Big Lots, Rite Aid and more” 2024
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