The retail landscape still looks dim. While about 15,000 stores closed during 2020, the post-pandemic years do not look particularly great either. UBS estimates that another 80,000 stores will shutter by 2026, and that number could even approach 150,000. The Covid-19 lockdown and retail store restrictions drove many merchants to close without hope of re-opening.
Most malls have lost anchor department stores that account for sizable space that will not quickly be re-occupied. E-commerce has become an ingrained shopping habit for many consumers who will continue to buy online. Some advantages for stores left standing are that there will be less brick-and-mortar competition, rents are coming down, and there is pent-up demand for people to get out again.
The U.S. has been over-stored for several years, so it remains to be seen when— and at what level—the mass closures will begin to ease.
The following excerpt from a Yahoo! Finance article reports more on the topic:
Vaccines are in the arms of around a third of the country (at least the first dose), and people are thinking about returning to aspects of their old lives again, like shopping in stores.
But a reopening bounce for retail might not be a sure thing.
A new report from UBS’s retail analysts suggests that 80,000 stores will close in the U.S. over the next few years.
“We estimate that 80,000 stores will close by 2026 in our base case,” the report found. The worst-case scenario is 150,000 stores closing.
The “enduring legacy” of the pandemic’s effect on retail, as UBS puts it, is the push to online shopping, as fears over the coronavirus as well as stay-at-home orders to prevent transmission have kept many people at home.
In 2020, 17 major retailers filed for bankruptcy – including Lord & Taylor, Century 21 and Brooks Brothers – while others are at risk of default.
Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group
