A slow housing market doesn’t only impact buyers, sellers and agents. It affects retail businesses that rely on the moves of those players.
Retailers focused on home goods, flooring and painting are struggling in the wake of a cool home sales period, the Wall Street Journal reported. Select companies have buckled under the weight of weak sales — and other economic factors — and tripped straight into bankruptcy.
Big Lots and Conn’s are among the retailers to file for bankruptcy last year, the former seeking protection back in November. Gordon Brothers Retail Partners recently agreed to buy Big Lots for up to $495 million in a move that would see the transfer of stores and the brand to Variety Wholesalers.
LL Flooring filed for Chapter 11 bankruptcy protection over the summer. While a private equity firm swooped in to acquire the company, roughly half of its retail portfolio is still slated for the chopping block.
“We only need so many couches,” CoStar Group’s Brandon Svec said in regards to a pivot towards services, rather than goods for homeowners.
Executives from Lowe’s and Home Depot have also noticed the difficult moment for home retailers, noting that rising prices led customers to reel in home improvement projects and discretionary spending last year.
In November, existing home sales scored their biggest annual gain in three years. But sales were fewer and farther between last year, with overall purchases of previously owned homes expected to hit a three-decade low and high mortgage rates remaining a pest for buyers and sellers.
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For the previous year, net store closures outpaced openings in the United States, according to Coresight Research, the first time that happened since 2021. Last year also had double the number of retail bankruptcies compared to a year earlier, standing at 51 in total with a few days left in December, according to Coresight.
More closures are expected in the coming months, and while the housing market isn’t solely to blame, it certainly shares some of the burden.