REBusinessOnline

UBS Predicts 80,000 US Retail Stores to Shut Down by 2026

Ulta Beauty

With the end of the pandemic in sight, Ulta Beauty says it expects sales to rebound this year at its stores, such as this location in Lynnwood, Washington.

ZURICH, SWITZERLAND — According to UBS, a global finance and research firm based in Zurich, 80,000 retail stores in the United States are predicted to close their doors by 2026. This report assumes e-commerce sales will rise to represent 27 percent of total retail sales. The current share of e-commerce is 18 percent for all retail sales.

There were 115,000 shopping centers at the end of 2020, which includes strip centers, outlet malls, shopping malls and other lifestyle retail centers. This figure compares to 112,000 shopping centers in 2010 and 90,000 in 2000, according to an UBS analysis using data from the International Council of Shopping Centers (ICSC).

The UBS report suggests that the United States has too much retail space per capita, with about 59 square feet of shopping center space per household. Many retailers are taking advantage of how cheap rent is right now, and the plentiful amount of vacant retail space. Beauty, grocery and discount goods retailers like Ulta Beauty, Dollar General and TJX Cos. brands like T.J. Maxx and Marshalls are expecting a rebound in sales with end of the pandemic in sight.

Additionally, UBS says that the government stimulus such as the $1.9 trillion stimulus the U.S. gave out in March of this year, is helping with the growth of retail stores. The government stimulus also gives people more money to spend on goods in shopping centers. Due to the pandemic, travel and some entertainment events are still on pause, so many people are choosing to spend their money on goods instead. The increase in online shopping has greatly helped the U.S. retail sector, according to the UBS report.

The velocity of store closures has decreased this year. According to data from Coresight Research, there have been 3,169 store closures and 3,535 store openings so far in 2021. In 2019, Coresight Research reported 9,832 store closures, which is the highest the company has seen since it started conducting research. In 2020, there were 8,741 store closures.

Last year, 17 national retailers filed for bankruptcy, including well-known chains such as Lord & Taylor, JCPenney and Guitar Center.

Despite the number of store closures decreasing since 2019, UBS expects a further downturn in retail sales. The company also expects that most of the closures (21,000) in the future will be seen among retailers that sell clothing and accessories.

Additionally, office supplies stores and sporting goods stores are predicted to be among the hardest hit in the retail industry.

On the flip side, however, UBS is more hopeful for stores in home improvement, grocery and auto parts, as its forecasts that these retailers will have the fewest store closures.

— Julia Sanders

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