UBS predicts that 80,000 stores will go dark by 2026

While the rate of store closures has slowed from the 2019 high, don’t expect the payback to last long, according to a new UBS report suggesting that America still has too much commercial space per capita.

At the end of last year, there were 115,000 malls (a figure that includes strip malls, malls, outlets and other lifestyle centers) across the United States, compared to 112,000 in 2010 and 90,000 in 2000, as found by UBS in an analysis with data from the International Council of Shopping Centers.

That equates to approximately 59 square feet of space in the U.S. home mall, which is slightly less than 62 square feet in 2010, UBS said. But it’s still well above 55 square feet of home space in 2000 and 49 square feet in 1990, analysts Michael Lasser and Jay Sole explained.

UBS estimates that about 80,000 retail stores, which is 9% of total stores, will close nationwide by 2026. This means that e-commerce sales will increase to account for 27% of total retail sales by then, compared to the current 18%.

“A lasting legacy of the pandemic is that online penetration has risen sharply,” Lasser said in a note to customers. “We hope it will continue to increase, which will drive further streamlining of retail stores, especially as some of the government’s unique support measures diminish.”

While more and more Americans are ordering everything from milk and bread to desk chairs and slippers on the Internet, store openings are surpassing closures for the first time in years. Many companies take advantage of the moment to take advantage of cheaper rents and ample free space to choose from. Growth comes largely from retailers selling beauty products, groceries and discount products, including Ulta, General Dollar, TJX and Lidl, which anticipate a strong post-pandemic rebound in store visits.

U.S. retailers have announced 3,169 store closures and 3,535 store openings so far this year, according to data compiled by Coresight Research. The company tracked 9,832 closures in 2019, the highest it has seen since it began tracking that data. That figure dropped to 8,741 in 2020.

UBS said the retail industry has recently been backed by government stimulus and consumers who have shifted their dollars to service goods, with travel events and other entertainment paused due to the pandemic. But he said these trends will be short-lived, which will lead to a forecast of declining retail sales, which will lead to an increase in trade closures.

UBS predicts that the largest number of closures will be found among retailers selling clothing and accessories in the coming years. The firm expects about 21,000 closures in this sector by 2026, with many of the closed stores located in closed malls.

The closures are expected to be the most modest in the retail sale of home improvement products, groceries and cars, as these categories are less susceptible to damage with the rise of e-commerce, UBS said.

– CNBC Michael Flower has contributed to this report.