(Bloomberg) – According to a new report, American retailers could close tens of thousands of stores even after the pandemic subsides, as shoppers continue to turn to e-commerce.
In the next five years, about one in 11 stores will close, with office supply, sporting goods and clothing retailers among the hardest hit, according to UBS analysis released Monday. In a worst-case scenario, more than twice as many stores, some 150,000 in total, could close during that period.
“An enduring legacy of the pandemic will be the dramatic increase in online commerce,” UBS analysts, led by Michael Lasser, wrote in the report. “We hope it continues to increase.”
US stores shifted their focus to online operations when the Covid-19 pandemic forced physical locations to temporarily close. Even after the reopening, visitors have been slow to return and stores were quick to offer services like in-store pickup and virtual shopping to get consumers back to shopping. Pedestrian traffic in shopping centers is down about 30% from the previous year, according to real estate data firm Green Street.
More than two dozen large retailers filed for bankruptcy last year, including household names like JC Penney and Lord & Taylor.
According to the UBS report, stores that sell clothing, consumer electronics and home furnishings are likely to see the most closures, with 35,000 in total. Office supply retailers are expected to experience the largest impact proportionally, with 45% of their store networks expected to close. Shopping centers are likely to be a key source of closures.
The report finds that only auto parts retailers will maintain roughly the same number of locations, with in-store sales reaching an all-time high in the third quarter of 2020, the analysts found. These stores are more protected from digital options because customers often need them immediately and offer services that must be done in person.
Original Note: Even After Pandemic, Retailers Seen Closing Thousands of Stores
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