Former Macy‘s CEO Terry Lundgren told CNBC on Monday he expects coronavirus pandemic-related disruption for the retail industry to persist well into next year, leading potentially to more store closures.
“We’re not done yet. … We’re going to learn even more when we get through the holiday season,” Lundgren said on “Power Lunch.” “Retailers who have a weak balance sheet today aren’t going to get relief in January. It’s going to get tougher. When the volume of purchases drops dramatically after Christmas, the expenses remain.”
More than 11,000 retail location closures have been announced in 2020, according to a report from real estate firm CoStar Group. The closures come as the Covid-19 pandemic helped usher in an acceleration of online shopping, which was evident during the holiday season. On Black Friday last month, for example, online spending was up 22% year over year, according to data from Adobe Analytics.
“This movie is not finished. I suspect we’re going to see more closings throughout 2021,” said Lundgren, who was Macy’s chief executive from 2003 to 2017. He retired from its board of directors in 2018.
That may be bad news for both small, independent retailers and larger companies in an economically precarious position, Lundgren said. However, he said eventually those businesses with brick-and-mortar locations that outlast the pandemic will benefit.
“They’re actually going to have an opportunity to grow again. That’s the upside, the green shoots, from that perspective of store closures,” Lundgren said, predicting it is “probably not too much more than six months from now.”
While the pandemic and its economic consequences were the main drivers of retail closures this year, Lundgren contended that another reason the number has been so high is because the U.S. had too many stores to begin with.
“We’ve been an over-stored country for more than a decade. It’s been something we’ve been working to try to slowly and gradually correct but frankly, we have too many physical stores,” Lundgren said. “There had to be a contraction of physical stores,” he added. “It’s just aggressively accelerated here in the last year.”