Roughly 80,000 stores are doomed to close in the next 5 years as the retail apocalypse continues to rip through America

  • Roughly 80,000 stores are expected to close over the next five years, according to a new UBS report.
  • The prediction follows a grim decade for the retail industry, dubbed the “retail apocalypse.”
  • Roughly one-quarter of American malls are expected to close in the next three to five years.
  • See more stories on Insider’s business page.

Another 80,000 stores are expected to close over the next five years as the retail apocalypse continues to bear down on the US.

That’s according to a new report released by UBS analyst Michael Lasser, which predicts that the total number of retail stores will drop from 878,000 in 2020 to 797,000 by 2026.

In the early months of the pandemic last year, UBS predicted that 100,000 stores in the US would close their doors by 2025 amid the rise of e-commerce. The pandemic, analysts said, would result in shoppers permanently altering their shopping habits and accelerate a dependence on e-commerce over brick-and-mortar shopping. 

Now, UBS says that retailers fared better than expected over the last year: Store closures decelerated in 2020 versus 2019, which the firm chalks up to government stimulus and an overall shift in how people spent their money last year — toward goods and away from services.

But that boost, UBS warns, is temporary.

“As the consumer backdrop normalizes, we think the challenges faced by undifferentiated retailers will become more apparent,” Lasser wrote.

Read more: Americans are flocking to outdoor shopping experiences, a trend experts say will continue post-pandemic as consumers favor local outlets and strip malls

UBS’ predictions follow a grim decade for the retail industry. Retailers have struggled to get back on their feet since the late aughts, which has led to private equity stepping in and mounting debt among mall brands. 

According to a report from Coresight Research cited by CNBC last August, roughly one-quarter of American malls will close down in the next three-to-five years — Moody’s Analytics expects roughly 135 million square feet of space at regional malls to become available during that time.

And while store closures may have slowed slightly, retail vacancy rates are still nearing a seven-year high and major brands announced more than 12,000 store closures in 2020 alone.

But according to UBS, there is hope for some retailers: 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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