- UBS anticipates short-term recovery in retail after COVID-19 pandemic followed by a significant number of store closures
- Prediction based on anticipated increase in e-commerce to represent more than one-quarter of retail sales
- Retail currently continues to expand, based in part on more commercial space availability and lower rents
Summary by Dirk Langeveld
Nearly one in 10 retailers in the United States will shut their doors in the next five years, according to a report by UBS. The financial services company says the amount of retail space per capita in the U.S. currently far exceeds demand, and that the ratio will become more lopsided as e-commerce grows.
UBS anticipates that 80,000 retail stores, or 9 percent of the nation’s total, will close by 2026. The prediction is based on the assumption that e-commerce, which has seen rapid growth during the COVID-19 pandemic, will rise as a share of retail sales from 18 percent currently to 27 percent. E-commerce is expected to have a more negative effect on certain retail sectors, namely clothing and accessories, office supplies, and sporting goods.
UBS says retail has seen a recent boost due to stimulus spending and a shift in consumer spending away from sectors like travel, but anticipates that this trend will be short-lived.
Some retailers are nevertheless banking on continued consumer demand for in-person shopping, and are taking advantage of increased commercial vacancies and cheaper rents to open locations or expand. Store closings in 2020 were down from a record high of 9,832 in 2019, and store openings this year have so far outpaced closings.
