UBS makes bleak future of bricks and mortar retail prediction

UBS makes bleak future of bricks and mortar retail prediction

80,000 more retail stores could close by 2025, according to a report from UBS.

“We estimate for each 100 bps increase in (e-commerce) penetration (currently 16%), an additional [9,000] stores would need to close,” UBS analysts write. “To put this in perspective, it would be the equivalent of seven Toys ‘R’ US chains.”

Anywhere from 30,000 to 80,000 stores would disappear should e-commerce penetration reach 25% of retail sales by 2025. The 80,000 figure is based on 2% total retail sales growth, and the 30,000 figure on 3% sales growth.

Some retailers are, however, well placed to weather the storm, having been disciplined in their store opening plans in recent years. This has resulted in estates that aid their online businesses. For instance, The Home Depot and rival Lowe's offer ship from store options to customers and have found success reimaging physical locations as service centres.

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