Why Analysts Predict Another 75,000 US Stores Could Close by 2026

The retail landscape has undergone seismic changes in the last decade, and according to a new report from investment firm UBS, the upheaval is far from over.

The firm’s analysts expect the number of store closures to reach 75,000 by 2026 — a figure that amounts to close to 10,000 per year. Based on 2019’s year-to-date closures, this doesn’t seem far-fetched: Retail and technology advisory Coresight Research has tracked 5,846 store closure announcements in just the first 15 weeks of the year. (By comparison, the company tracked 5,854 closures in all of 2018.)

The causes of the recent bloodbath have become familiar: Bankruptcies and liquidations at discount mainstay Payless ShoeSource (2,100 stores), children’s retailer Gymboree (800 stores) and mall chain Charlotte Russe (500 stores) account for a sizable share of the closures already announced, while Sears is in the process of whittling down its store count from the 700 it had when it filed for Chapter 11 protection in the fall to the 425 agreed upon in bankruptcy court.

Even retailers that are performing well financially are trimming their physical footprints to focus on profitable stores and direct further resources to e-commerce: Last month, fresh off a stellar fourth-quarter earnings report, Foot Locker Inc. announced plans to shutter 165 stores globally in 2019. (And while it also plans to open 80 new locations, it has reduced its total store count every year since 2014.)

Despite widespread talk of a “retail apocalypse,” these closures don’t necessarily spell doom and gloom for the economy. Analysts are generally in agreement that the U.S. is overstored, and particularly as more people shop online, many businesses will be better served with a leaner fleet of brick-and-mortar locations. The trend of vacant stores increasingly being converted into mixed-use spaces, offices and fitness centers is likely to continue, then: UBS expects e-commerce to account for 25 percent of all U.S. retail sales by 2026, up from about 16 percent today.

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