As many as 80,000 retail stores are likely to close in the US over the next five years as the pandemic has deeply scarred the economy and resulted in a permanent shift in how consumers shop. That’s the conclusion of a sobering report by investment banking giant UBS.


The rise of online shopping

An enduring legacy of the pandemic is that online shopping rose sharply, and this trend is likely to continue. This will drive further closure of retail stores, especially as some of the one-off support measures from the US government subside, the report says.

The number of shopping centres relative to the US population is shrinking, and some have been outright abandoned and literally left to rot.

Shopping centres now represent 59 sq ft of shopping centre space per US household, down from 62 sq ft in 2010. That number is expected to plunge by 2026 as online shopping dominates.

The UBS report estimates 9% of all retail stores will close down by 2026, or about 80,000 retail stores. It assumes, during this period, that e-commerce sales will jump to 27% of total retail sales by then, up from 18% today.


The future of retail stores

UBS says many retail stores have been on life support and surviving mainly because of cheap government loans and a supercharged consumer via Covid-related stimulus cheques.

The short-term artificial boost from such cheques will be short-lived, however, which will lead to even more store closures.
Many of the closures will be retailers who sell clothing and accessories. UBS believes 21,000 closures from this industry will have occurred in the US by 2026.

Office supplies and sporting goods businesses are other retailers that will be hit hard. Not all sectors will suffer, however, with auto parts, home improvement, and grocery retailing likely to still fare well.


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