An epidemic in 2020 led to an increase in store closures, with dozens of retailers filing for bankruptcy, vacating shopping malls and scattering vacancies in major street markets, including New York City.
Later, though, there was a temporary relief from the closure, as companies took the opportunity to rapidly reduce the number of their stores in 2020 when customers were stuck at home. Indeed, in 2021, retailers announced the opening of the Net Store, marking the sudden reversal of the net collapse year after year. Companies seize the opportunity to take advantage of cheaper rentals and the interest among Americans to go out and shop again.
Although analysts at UBS are seeing more pain ahead, this is not as close as the investment bank initially estimated about a year ago.
Brick-and-mortar stores have proven to play an important role for retailers’ businesses during the Kovid epidemic, the bank said in a new report on Wednesday, and retail sales growth has remained strong due to rising inflation. All of this points to a better future for the physical store, according to UBS retail analyst Michael Laser.
UBS now plans to close 40,000 to 50,000 retail stores in the United States over the next five years, less than the previously estimated 80,000 closures. It is among the approximately 880,000 total retail stores that the firm tracks nationwide, excluding gas stations.
This estimate puts U.S. retail sales at about 4% year-on-year growth, ahead, and e-commerce sales as a percentage of total retail sales will increase by 25% by 2026, up from 18% in 2021, the Laser report said.
By 2026, UBS will be the largest retailer of apparel and accessories retailers, consumer electronics businesses and home furnishing chains, with approximately 23,500 increasingly closed in this segment.
Traditional shopping malls are more at risk of closing than nearby strip centers, the agency said. This is largely because shoppers are often anchored in traffic malls, often anchored by department store chains, in recent years because consumers are more inclined to travel to stores closer to where they live.
Meanwhile, general merchandise retailers and auto parts businesses such as Target and Walmart are expected to report net openings in the coming years.
According to Lasser and his team, as of 2021, the United States still has about 58 square feet of shopping center space per household. Although it was less than 62 square feet per household in 2010, it was above 55 square feet in 2000 and 49. Sqft in 1990.
As consumers shift their higher costs to the web, this only means that the number will shrink, Laser explained.
So far this year, retailers’ plans to open new locations have outpaced plans to close their stores. Tracking data from Corsite Research shows that U.S. retailers announced only 1,385 stores closed, compared to 3,694 openings as of April 1.
Store growth is being driven by the dollar chain and discount stores, such as Dollar General and TJX – and is also being driven by a wave of so-called digital native companies that started on the Internet but now seek to acquire new customers through bricks and mortar. Some examples are Warby Parker, Alberts, Bhuri, Brooklynen and Fabilitics.
The number of shopping centers in the United States peaked at 115,000 last year, up from 90,000 in 2000, despite the continued acceleration in e-commerce, UBS, which publishes the Deep-Dive Store Closure report, which is closely followed every few years. .