A prognosis on the state of US retail shows 80,000 stores may close by 2026. The impact of the pandemic has shooed global consumers to shop online, with investment analysts at UBS estimating 27 percent of all goods purchased at retail will be made online by the end of 2026. That’s up 18 percent of total retail today. The store closures equate to 9 percent of the current 878,000 physical retailers.
UBS analysts see mall-based retailers as particularly hard hit in the years to come. Specialty apparel and accessories chains and department stores have seen a growing percentage of sales being made online, while Amazon and others are gaining market share, reported Retail Wire. Americans’ migration online is necessitating changes in real estate strategy. Retailers are reconfiguring existing selling space on store floors to expedite local fulfilment of online orders. Most importantly, retailers must find a purpose for its physical stores.
So far in 2021, the US has reported 3,169 store closures and 3,535 store openings, said news outlet CNBC.
Some iconic retailers, like J.C. Penney, have been on the verge of closing down, surviving Chapter 11 bankruptcy to end up coming back in a different form. J.C. Penney, for example, slimmed-down its company operations and retail model to approximately two-thirds of its previous portfolio. The company is working with fewer suppliers and adding more private labels to help with cash flow, said Pymnts.
2020 has been the start of a grim decade for the retail industry.
The pandemic, UBS said, would result in shoppers permanently altering their shopping habits and accelerate a dependence on e-commerce over brick-and-mortar shopping. But there is a silver lining in clouds: Stores are shifting to become “the centerpiece of interacting with customers,” handling tasks like fulfilling online orders. Companies that are able to adapt their store formats - like Costco, Walmart, Home Depot, and Lowes - will be “best positioned” to weather the storm, the report said.
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