UBS predicts 80,000 stores will go dark by 2026

Although the pace of store closures has slowed from its 2019 high, you should not expect the delay to last long, according to a new UBS report suggesting that America still has far too much retail space per capita.

At the end of last year, there were 115,000 shopping malls – a figure that includes strip malls, malls, stores and other lifestyle centers – in the US, compared to 112,000 in 2010 and 90,000 in 2000, UBS found in an analysis with with the help of the International Council of Shopping Centers.

That equates to about 59 square feet of shopping center space per U.S. household, which in 2010 was slightly less than 62 square feet, UBS said. However, analysts Michael Lasser and Jay Sole still have it well over the 55 square meters of space per household in 2000 and 49 square meters in 1990.

UBS estimates that about 80,000 stores, which is 9% of the total stores, will be closed across the country by 2026. This assumes that e-commerce sales accounted for 27% of total retail sales, up from 18% today.

“A permanent legacy of the pandemic is that online penetration has risen sharply,” Lasser said in a note to customers. “We expect this to increase, which will drive further rationalization of retail stores, especially as some of the government’s unique support measures are declining.”

Although more Americans are increasingly ordering everything from milk and bread to desk chairs to sneakers on the Internet, for the first time in years, store openings are larger than the closures. Many businesses are taking advantage of the moment to take advantage of cheaper rentals and there is plenty of room to choose from. The growth is mainly coming from retailers selling cosmetics, groceries and discount goods, including Ulta, Dollar General, TJX and Lidl, who expect a strong recovery after the pandemic in visits to stores.

U.S. retailers have announced 3,169 store closures and 3,355 store openings so far this year, according to data from Coresight Research. The firm tracked down 9,832 closures in 2019 – the highest it has seen since it began tracking this data. This figure dropped to 8,741 in 2020.

UBS said the retail industry was recently supported by the government’s stimulus and that consumers are shifting their dollars to goods of services, with travel and other entertainment events being interrupted due to the pandemic. But it is said that these trends will be short-lived, which will lead to a predicted downturn in retail sales, which will lead to an increase in retail closures.

UBS predicts most closures will be found among retailers selling clothing and accessories in the coming year. The firm predicts about 20,000 closures of this sector by 2026, with many of the shutter stores in closed malls.

Closures are expected to be the most modest in home improvement, grocery and auto parts retail, as these categories are less susceptible to damage with the increase in e-commerce, UBS said.

– CNBC’s Micael Bloom contributed to this report.