Australian Stores Closures List
One of the hot topics for retail and any observe of retail is who is bankrupt and who is closing stores (note the two can happen separately obviously). After all COVID is an accelerator, so we are keeping this as a live blog for retailers who are closing stores, so far we’re kicking off with a list just for Australia’s major chains, and 2020 looks like the one to top them all with currently around 933 stores closed or closing as a part of restricting effort or voluntary administration as more businesses look to go online.
So here we go - obviously this is a live document so feel free below to comment where I’ve missed something.
Current Store Closures + Projected 2020 finish
Let’s jump into it by looking at historically the store closure numbers. We can see that in 2016 we had a spike on the back of a double-whammy in Masters + Dick Smith shutting up shop. Arguably this was a ‘black swan’ event, as when we look at store closures form 2017 - 2019 things look much smoother…until we hit 2020. Now 2020 we haven’t had a major chain - like in 2016 - shut, but rather it’s been marred by smaller businesses closing down, being sold or shifting into going ‘pure play’. As well as a lot of the start of store closure + channel optimisation projects kick off. We’ll talk about this shortly. We project, based on the current rate of closure that we will finish the year just around 2016’s store closure rate at 905 stores. Just to note we’ve been careful what we put in 2020’s numbers. There have been many bigger retailers like Target, DJ’s, Mosaic Group etc talking about store closure plans over 2020-21 and we have just included in 2020’s numbers those that have been stated for this particular year.
FYI - currently the store closures that were announced this year and will carry into 2021 stand at potentially 713 stores.
Store Closures by Year
Source: AFR, News.com, SmartCompany, Annual Reports
Store Closures by Category: Fashion the Hardest Hit in 2020
If we then delve into the numbers we can see that fashion (inc. Department Stores, DDS + Specialty) was the hardest hit. This makes sense, as in 2016-17 we had an influx of new competition in this are as Zara, H&M + Uniqlo all entered the market. This put immense pressure on the middle market and we saw the likes of - Willow, Gap, Webster Holdings (Marcs/ David Lawrence), Lover, Seduce, Blue Juice, Meredith More - all close store or move into administration. This pressure has just increased, and added to it as been the consumers shift online (and the plethora of online global competition that is there).
2020 as a year of acceleration saw the rate of store closures in fashion increase by more than 200%. Looking at the current projected amount of store closures in 2021 these are currently all attributed to fashion (more on that next). Most of the casualties + closures in fashion were in speciality fashion with Jeans West, Tigerlilly, Jigsaw UK, Tuchuzy, G-Star Raw, Pavement, Seafolly, TM Lewin, Mosiac Group + Alice McCall all closing stores. A majority of which have been on the back of voluntary administration of in the case TM Lewin + Jigsaw a renewed focus on their local markets (withdrawing from Australia).
It’s interesting to note in the case of businesses that were bought out of VA like TigerLily, Seafolly, Collette by Collette Hayman, Matt Blatt and Kiki K the push to change the channel reliance of these brands. All 5 of these brands new owners have spoken about closing stores and renewing the focus online as a primary channel. We expect to see a lot more of these next year, as the ROI on a physical store becomes harder to justify in some categories (without it being a marketing expense).
Store Closures by Category
Source: AFR, Annual Reports, SmartCompany, News.com, SMH
2021: Predictions + Current Stated Closures
2020 has also been the year of retailer v. mall owner. If feels like there hasn’t been a major speciality retailer’s annual report which hasn’t mentioned that it will be looking at store closures or a ‘channel optimisation project’ (code for closing stores). There’s also been lots of chat in these reports around flexibility to move, almost like it’s a ‘flex’. For example in Premier Investments Annual Report they stated that 70% of their 1040 stores leases were expiring in 2020 (or were in holdover); or Mosaic with 1333 stores who stated that 41% of their leases would expire by December 2020 (or were in holdover) and 87% due to expire within the next 2 years. So shots were fired from retailers to landlords, making it clear that store closures were a likely prospect coming up unless an equitable partnership would be reached.
With all that said, this is what we know about store closures that will continue in 2021, currently the number stands at 713…and the year is yet to begin. Also FYI these are all store closure projects so we can expect some VA’s next year which will no doubt see this number lift over 2020s. With online now at 14% of sales (as of November 2020), we know this is the tipping point for how we now think about the role of the physical store.
2021: Estimated Store Closures
Obviously the above is speculative, but what’s interesting is to look at public lease expiries. Which can give some indication of the flexibility these retailers have. So 2021 should be an interesting continuation of 2020…obviously without the shock of a new pandemic.
PS. if you have anything to add to the numbers above - please leave in comments below!
Finally…
Store closures is one of the many trends we see coming in 2021, purchase our latest Retail in 2021 report to understand more. Details here.