80,000 More Retail Stores To Close As COVID Shifts Spending To Online

The retail apocalypse has been well documented for readers over the years as tens of thousands of brick and mortar stores nationwide have shuttered their doors. 

The problem today is that millions of jobs lost during the pandemic are never coming back – in a consumer-based economy this sets up for even more store closures.

UBS analyst Michael Lasser told clients this week that a whopping 80,000 retail stores are estimated to close in the next five years as the virus pandemic has deeply scarred the economy and resulted in a permanent shift in how consumers shop, that is, online.

“An enduring legacy of the pandemic is that online penetration rose sharply,” wrote Lasser.

“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,” he said. 

UBS found at the end of 2020, there were 115,000 shopping malls, compared with 112,000 in 2010 and 90,000 in 2000.

Lasser said that equates to approximately 59 square feet of shopping center space per U.S. household, less than 62 square feet in 2010. That number is expected to plunge by 2026 as online shopping dominates.

UBS estimates 9% of all retail stores will shutter operations by 2026, or about 80,000 retail stores.

Lasser assumes during this period that e-commerce sales will jump to 27% of total retail sales by then, up from 18% today.

UBS said many retail stores have been on life support following cheap government loans and a supercharged consumer via stimulus checks. The short-term artificial boost will be short-lived, which will lead to even more store closures.

Many of the closures will be retailers who sell clothing and accessories. UBS believes 21,000 closures from this industry will be by 2026. Office supplies and sporting goods businesses are other retailers that will be hit hard.

The good news is that auto parts, home improvement, and grocery retailing will be less susceptible to the retail apocalypse.

However, there is more bad news. The labor market recovery is not robust. The economy is still short 8 million jobs and 19 million people are collecting some form of unemployment insurance. 

This is a large swath of the population who have fallen into financial hardship and are increasingly unlikely to return to their jobs anytime soon.

Originally published at Activist Post - reposted with permission.