UBS Predicts Tens of Thousands of Stores Will Close in the U.S.

A new UBS report has revealed a disheartening projection of where U.S. stores are headed in the next five years. According to the firm, 80,000 stores will close in the nation by the year 2026.

UBS had found that by the end of 2020, 115,000 shopping centers had existed. This is compared to 112,000 in 2010 and only 90,000 in 2000.

UBS is estimating that about 80,000 retail stores, which is 9% of total stores, will close their doors across the country by 2026. This assumes that e-commerce sales will rise and represent 27% of total retail sales by then. That’s up from 18% today.

“An enduring legacy of the pandemic is that online penetration rose sharply,” UBS’s Michael Lasser wrote in a note. “We expect that it will continue to increase, which will drive further rationalization of retail stores, especially as some of the unique support measures from the government subside.”

UBS is expecting that most closures will be found among retailers that sell clothing and accessories in the years ahead. The firm believes about 21,000 closures from this sector will happen by 2026, with many of the shuttered stores located in enclosed shopping malls.

UBS said the closures are anticipated to be the most modest in home improvement, grocery and auto parts retailing, as these categories are less susceptible to harm with the rise of e-commerce.

This number is better than the number the firm had said in April of 2020. At that time, UBS predicted that 100,000 locations could close by 2025, a trend accelerated by the COVID-19 outbreak where more people turned to e-commerce for their shopping.

“Even when stores do open, it may take a while before people will regain their confidence about being safe in crowded places,” Lasser and UBS analyst Jay Sole said in a note to clients at the time.

Last year stores like Forever 21 and J.C. Penney, who were already struggling, and Papyrus, Modell’s Sporting Goods and Art Van Furniture had announced plans to liquidate.