FacilitiesNet - Facilities Management News and Education BOM + FMD + NFMT
VIDEO   Not a fnPrime member? Join for less than $0.55 a day Purchase Now »

The Retail Market Is Healthier Than You Think

This short video gives FMs an update on the current state of the retail sector

The Retail Market Is Healthier Than You Think
VIAVAL TOURS / Shutterstock.com

Thanks to the COVID-19 pandemic, the retail market set records last year for retail and restaurant bankruptcies, as well as store closures. Outside of a few retail sectors that boomed, most tenants, landlords and lenders faced unprecedented challenges. Yet, retail has proven to be more resilient than anyone expected. The damage, though considerable, has been nowhere near what most analysts anticipated.

The silver lining in the pandemic's dark cloud, is that after great — and accelerated — pain, much of the retail sector is entering a healthier place than it was before the pandemic.

In this short video, retail economist and COO of Lockehouse Retail Group, Garrick Brown, gives an update on the current state of the retail market.

Here’s a preview:

Right now we have the lowest level of retail bankruptcies that we've had going back to about 2012. But we set records last year. If you add up all the major chains — retail and restaurants, and this is basically chainsaw 100 units or more — we were moving in on 75. More than double what we lost in a great recession. It was a brutally painful year, and of course, the closures that we had weren't just from tailored brands, which closed about a third of their stores in bankruptcy. They've re-emerged.

Here's the thing: in past years, about 25 of those bankruptcies ended in liquidations. Last year, it was about 10. I want you to think about that. Why, when there's so many bankruptcies and everyone's saying this is the retail apocalypse, why would lenders be more willing to work things out?

Simple. Because the sheer numbers of the bankruptcies they couldn't absorb. All those hits so suddenly collectively as an entire industry we've had almost three quarters of a trillion worth of debt wiped off the balance sheets of U.S. retail and restaurant companies. Now, did we close a ton of stores? Yeah, and this wasn't just bankruptcy related. Because you know, for example, Microsoft said, ‘Hey, we're done with the retail space. Our credit's great. We're just going to do everything online.’ They close 130 stores so we set records.

But what's the state of retail today is the real question. What I propose to you is that retail's ugly bandage got ripped off at once and that the silver lining of the very dark cloud of COVID is that we're actually in healthier shape for the most part, with a few exceptions today, than we were not just before the pandemic but going back to 2019. This was the bankruptcy watchlist I had that was keeping track up for the pandemic. This is from Moody's Fitch Credit intel. Basically anybody who had a flag. This is page one of the bankruptcy watchlist that we had in the summer of last year and the rest of page two. This is the list today. It's the lowest number of retailers I've had on a bankruptcy watchlist.

$125 Annually

Already have an account? Renew your subscription

Continue reading with an fnPrime membership

Run your facilities more efficiently and more profitably than ever before!

Learn More »

Key Trends