What Is in Store for Retail Next Year?

This year, the pandemic severely disrupted the retail market, but many of the impacts of that disruption won’t emerge until 2021. Next year, there will likely be an increased in retail bankruptcies and foreclosures across retail segments, particularly those that were already struggling prior to the pandemic.

“There will be continued retail bankruptcies and store closures in 2021,” Alex Zikakis, president and founder of Capstone Advisors, tells GlobeSt.com. “Many of the bankruptcies and store closures will be in the categories that were already in decline, such as department stores and apparel, but will also temporarily affect service and entertainment categories such as sit-down restaurants, fitness, and group entertainment venues.”

Store closures will open the door for new retailers to move-in at reduced rates, and that could potentially inform the next stage of retail. If the last cycle focused on service and entertainment retailers for example, the next wave could look different.

“Vacant spaces will be filled with a variety of users. We are watching brands that started off as exclusively e-commerce open brick and mortar stores,” says Zikakis. “There are plenty of traditional retail operators that have served their customers effectively and are now in the market to take advantage of new leasing opportunities with more generous terms.”

The good news: pent up consumer demand will help to fuel retail activity. That means that there will be a retail market when the world reopens. “There is no doubt in my mind there will be a strong increase in consumer demand for goods and services as soon as we are able to safely get back into public spaces in a meaningful manner,” says Zikakis. “People are social animals, and a pandemic might change behavior for the short-term, but some things will revert including our desire for human interaction.”