Former MacyTerry Lundgren, CEO of CNBC, told CNBC on Monday that he expected it to Coronavirus pandemic-related retail disruptions that will last well into next year and potentially lead to more store closures.
“We’re not done yet. … We’ll learn more when we get through the holiday season,” Lundgren continued “Power Lunch.” “Retailers who have a weak balance sheet today will not get any relief in January. It will be tougher. If the volume of purchases drops dramatically after Christmas, spending will remain.”
More than 11,000 retail store closures were announced in 2020, after a report from the real estate company CoStar Group. The closure came as the Covid-19 pandemic accelerated online shopping that was evident during the holiday season. For example, on Black Friday last month Online spending increased 22% year over yearaccording to data from Adobe Analytics.
This could be bad news for both small independent retailers and larger companies in an economically fragile position, Lundgren said. However, he said that ultimately those companies with stationary locations that survive the pandemic will benefit.
“You will actually have the opportunity to grow back. That is the benefit of the green shoots, from this store closure perspective,” Lundgren said, predicting it “probably won’t take more than six months”.
While the pandemic and its economic aftermath were the top drivers for retail store closures this year, Lundgren claimed that another reason the high number was because the US had too many stores initially.
“We have been an overlaid country for more than a decade. We have tried to correct slowly and gradually, but honestly we have too many physical deals,” Lundgren said. “There had to be a contraction in physical deals,” he added. “It only accelerated aggressively here last year.”