More retail pain ahead: UBS predicts 80,000 stores will close in the U.S. by 2026

A Jos. A. Bank retailer location in San Francisco proclaims its everlasting closure on Aug. 6.

David Paul Morris/Bloomberg by way of Getty Images

Although the tempo of retailer closures has slowed from its 2019 peak, do not count on the reprieve to final lengthy, in response to a brand new UBS report that means America nonetheless has far an excessive amount of retail area per capita.

At the finish of final yr, there have been 115,000 buying facilities — a determine that features strip facilities, malls, outlet and different way of life facilities — throughout the U.S., in contrast with 112,000 in 2010 and 90,000 in 2000, UBS discovered in an evaluation utilizing knowledge from the International Council of Shopping Centers.

That equates to about 59 sq. toes of buying middle area per U.S. family, which is barely lower than 62 sq. toes in 2010, UBS mentioned. But it is nonetheless nicely above the 55 sq. toes of area per family in 2000, and 49 sq. toes in 1990, analysts Michael Lasser and Jay Sole defined.

UBS is estimating that about 80,000 retail stores, which is 9% of complete stores, will shut throughout the nation by 2026. That assumes e-commerce gross sales rise to characterize 27% of complete retail gross sales by then, up from 18% at present.

“An enduring legacy of the pandemic is that online penetration rose sharply,” Lasser mentioned in a word to shoppers. “We expect that it will continue to increase, which will drive further rationalization of retail stores, especially as some of the unique support measures from the government subside.”

Even although extra Americans are more and more ordering every thing from milk and bread to desk chairs to sneakers on the web, retailer openings are outpacing closures for the first time in years. Many companies are seizing the moment to take advantage of cheaper rents and ample vacant area to select from. The progress largely stems from retailers that sell in beauty, grocery and discount goods, together with Ulta, Dollar General, TJX and Lidl, that are anticipating a powerful post-pandemic rebound in visits to stores.

U.S. retailers have introduced 3,169 retailer closures and three,535 retailer openings thus far this yr, in response to knowledge complied by Coresight Research. The agency tracked 9,832 closures in 2019 — the highest it is seen because it began following this knowledge. That figure fell to 8,741 in 2020.

UBS mentioned the retail business has been supported not too long ago by authorities stimulus and by customers shifting their {dollars} to items from companies, with journey and different leisure occasions on pause because of the pandemic. But it mentioned these developments are going to be short-lived, resulting in a predicted downturn in retail gross sales, which will consequence in an uptick in retail closures.

UBS anticipates the most closures will be discovered amongst retailers that promote clothes and accessories in the years forward. The agency is forecasting about 21,000 closures from this sector by 2026, with lots of the shuttered stores situated in enclosed buying malls.

Closures are anticipated to be the most modest in dwelling enchancment, grocery and auto elements retailing, as these classes are much less prone to hurt with the rise of e-commerce, UBS mentioned.

— CNBC’s Michael Bloom contributed to this report.

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