1 in 11 retail stores in U.S. could close in 5 years
U.S. retailers could shutter tens of thousands of stores even after the pandemic subsides, as shoppers continue to turn toward ecommerce, according to a new report.
Roughly one in every 11 stores will close in the next five years, with office supply, sporting goods and clothing retailers among the hardest hit, the base case in a UBS analysis Monday revealed. In the most dire scenario, more than twice as many stores — about 150,000 in total — could close over that span.
“An enduring legacy of the pandemic is that online penetration rose sharply,” the UBS analysts, led by Michael Lasser, wrote in the report. “We expect that it will continue to increase.”
U.S. stores shifted focus to online operations as the COVID-19 pandemic forced physical locations to temporarily close. Even upon reopening, visitors were slow to return and shops rushed to offer services such as curbside pickup and virtual shopping to get consumers buying again. Foot traffic at malls has fallen about 30 percent from a year ago, according to real estate data company Green Street.
More than two dozen major retailers filed for bankruptcy last year, including household names such as J.C. Penney and Lord & Taylor.
Stores that sell clothing, consumer electronics and home furnishings will likely see the most closures, with 35,000 combined, according to the UBS report. Office supply retailers are expected to see the biggest effect proportionally, with 45 percent of their store networks expected to shut their doors. Shopping malls will likely be a key source of closures.
Only auto parts retailers are seen keeping about the same number of locations; their sales per store reached an all-time high in the past year’s third quarter, the analysts found. These shops are more protected from digital options because they’re often needed by customers immediately and offer services that need to be done in person.