Nearly 50 shops closed daily in the United States, United Kingdom and across Europe by December in last year 2022, and analysts see more pain ahead. Things are not like they used to be; it’s not like before the pandemic and the Russian war.
The COVID outbreak, the invasion of Ukraine, and the increased borrowing costs are among the many factors contributing to the unfortunate current retail sector condition.
Several reports from Europe and the United States agree that retail shops are closing at a higher rate from one year to the next.
Around the world, many retailers and small traders are struggling to stay afloat due to high inflation.
Product prices are rising, which means that consumers have less money to spend on their purchases.
As a result, many shops are not generating enough sales to cover their costs and are closing their doors.
The closure of shops worldwide due to inflation can have a negative impact on the global economy, as it can reduce production and employment, and can affect people and businesses around the world.
In 2021, the United Kingdom retail sector reported that a total of 11.449 shops were closed; the number jumped higher by nearly 50% in 2022, to 17.145 closed shops.
According to studies and estimates, the daily average of closed stores is 47 to 50 stores per day.
On top of that, the current retail situation is indirectly causing a labour market crisis.
Shop closures also have an impact on workers. Many people depend on their jobs in shops for their livelihoods, and when these businesses close, these people lose their jobs.
This can have a serious impact on their finances and quality of life.
In the United Kingdom, 150.000 workers lost their jobs last year because of the closed shops.
The unemployment rate in the United Kingdom is increasing, and the government has not shared its plan to solve both issues.
That includes high-performance countries such as the France, Germany, Italy, Spain, and the United States.
For example, let’s take the United States. Since the pandemic, big names have been forced to close some of their best locations, including companies like Amazon, Walmart, and Sears.
Shop closures in the United States are an issue that has been in the eye of the storm in recent times due to inflation. Many companies have had to make the difficult decision to close their doors due to increasing economic pressure.
For many reasons, that was not surprising, but the increase in closed shops was primarily connected to the labour market condition.
During the spread of the pandemic, unemployment became increasingly significant in these countries. Some workers were laid off due to the low GDP, and others quit their jobs for health concerns.
On the other side, economic reports pointed to rising material costs and inflation as important factors. Some shops were forced to close in order to reduce their losses.
Another real reason why so many shops have closed is the continued rise of online businesses.
With the popularity of the Internet and the ease of online shopping, many people have opted to shop online rather than go to physical shops.
This has led to a decline in demand for products in physical shops and, in turn, has led to the closure of many physical shops.
The scariest thing is that experts see more likely that this sector will suffer more in the next 2 years.
2022 was a real nightmare for all markets. The Wall Street Journal reported that most stocks fell more than 60% in 2022.
Moreover, almost all major indices have entered bear market or correction territory.
Looking ahead, economic experts predict that the number of closed businesses worldwide will increase by 50,000 by the end of 2024.
Meanwhile, there are many closures planned for this year, either for technical or financial reasons or simply because companies cannot afford to make any more losses.
Although it is too early to estimate the total number of shops and businesses that will close this year, all experts agree that more pain will have to be endured.
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