UBS retail analyst Michael Lasser predicts online retail penetration to hit 25 per cent by 2025, up from 15 per cent in 2019. By his calculations, this will result in closure of around 10,000 stores across the globe. Retailers with scale, such as Costco, The Home Depot, Lowe’s, Ross, Target, TJX, and Walmart, to name a few, will emerge winners in this scenario, capable of leveraging their resources and scale to survive tumult and upheaval.
Though store closure will vary by sector, apparel retail will be the biggest loser, with 24,000 doors expected to disappear from malls and main streets. Consumer electronics will lose 12,500 doors, while home furnishings will close 11,300 stores. Grocery retailers are predicted to close 11,000 locations. And as those doors close, Lasser expects enclosed malls will be under pressure as well.
Amazon’s dominant growth has ratcheted up pressure on the retail sector, especially for store-based brands. The online titan, Lasser says operated roughly 190 million square feet of U.S. fulfillment space in 2019, a meteoric rise from 12 million in 2009.
On the department store front, Lasser expects the channel to see more store closures ahead as store productivity has now plunged below peak levels from the second quarter of 2005 when sales per store averaged $18.6 million versus $10 million today.
