Retail

UBS: 75,000 Stores Should Shutter With eCommerce Growth

store closing

As online sales proliferate in the United States, UBS says merchants will have the need to close stores: The firm claims that businesses in the consumer electronics, clothing and home furnishing spaces will need to shutter more locations around the country, CNBC reported.

The investment firm said in a note to clients, “store rationalization needs to accelerate meaningfully as online penetration continues to rise.” According to analysts, approximately 75,000 more retail stores with the exception of restaurants will need to close with the assumption that eCommerce’s share of total U.S. retail sales reaches 25 percent by 2026.

The firm also forecasts that of that 75,000 figure, roughly 10,000 consumer electronics locations, 21,000 clothing locations, 1,000 home improvement locations and 8,000 home furnishing locations should shutter. If online grocery penetration increases to 10 percent by 2026, roughly 7,000 grocery locations could close. The investment firm also looked at the productivity of retail locations across the U.S. and noted that it accelerated through last year. But the firm noted, “We believe this pace of store productivity improvement is unlikely to be sustained in 2019 as the boost from fiscal stimulus fades.”

The news comes as retailers kept up the trend of shuttering stores last month with merchants such as Abercrombie & Fitch, Amazon and Dollar Tree making announcements on that front. Abercrombie was preparing to close up to 40 stores, while Dollar Tree indicated it was shuttering 390 Family Dollar stores. At the same time, Amazon said it will shutter all of its pop-up stores in Kohl’s, Whole Foods and U.S. malls starting in April.

As of the first week in March, 4,810 retail store closures had been announced this year. Only a week before, that figure was at 4,309 store closings. There have been around 2,264 store openings so far this year, however, with retailers such as Ulta Beauty and Peloton opening up stores. Even so, the closings trump the openings, a trend that is sending real estate firms on the hunt for new concepts or businesses to fill empty space.

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