Investment bank UBS projects between 40,000 to 50,000 retail stores in the U.S. will close over the next five years, down from the 80,000 closures it previously forecast, CNBC reports.
Brick-and-mortar shops served a critical role for retailers’ businesses during the Covid pandemic, the investment bank/financial services firm said in a new report on Wednesday, and retail sales growth has remained strong, due in part to rising inflation. This translates into good news for the future of physical stores, says UBS Retail Analyst Michael Lasser.
The new closing estimate assumes that U.S. retail sales grow about 4 percent annually going forward, and that e-commerce sales as a percentage of total retail sales will grow to 25 percent by 2026, up from 18 percent in 2021, Lasser said in the report.
UBS sees the most closures shaking out among clothing and accessories retailers, consumer electronics businesses and home furnishing chains, or about 23,500 cumulatively within these categories by 2026.
Traditional shopping malls remain at higher risk for closures than neighborhood strip centers, the firm said. That’s mainly because consumers are increasingly favoring quick trips to stores closer to where they live.
That’s also good news for general merchandise retailers like Target and Walmart, which are expected to report net openings in the years ahead.
Click here for the full CNBC report.