US retail industry to close 80,000 stores, online stores will continue to grow

US retail industry to close 80,000 stores, online stores will continue to grow

According to a recent report by UBS retail analysts , 80,000 stores in the US retail industry will close in the next few years . The report said that this forecast is based on conservative estimates, and in the worst case scenario, 150,000 stores will face the crisis of closure .

 

The main reason is that the epidemic has had a " lasting " impact on the retail industry - it has driven the trend of online shopping consumption. According to data, the market share of online retail in the entire retail sector has climbed from 14% in 2019 to 18% in 2020 , and in the past five years, the average online spending of American households has doubled, soaring from US$5,800 in 2019 to US$7,100 in 2020.

 

In fact, contrary to UBS’s pessimistic prediction, according to data collected by Coresight Research, in 2019 they tracked 9,832 closures ( the highest number since they began tracking this data ) . In 2020, that number dropped to 8,741 . So far this year, U.S. retailers have announced 3,169 store closures and 3,535 store openings.

 

Judging from this data alone, the development of the retail industry in the United States after the epidemic is still very optimistic, and the popularization of vaccines and strong government stimulus measures have indeed shown a certain recovery trend in the retail industry . So what exactly is the factor that causes UBS to hold such a pessimistic outlook for the retail industry?

 

First, the US epidemic crisis has not yet been truly resolved. The death toll in some states is still rising rapidly, and the number of infections is still increasing significantly . Under such circumstances, several states, including Florida and Texas, have canceled the mandatory mask-wearing requirements and other epidemic prevention and protection measures. This "relaxation" is obviously not conducive to the US epidemic, which has not yet been fundamentally alleviated.

 

Moreover, the arrival of vaccines and the Easter holiday has obviously made the American people relax their vigilance. According to data, the number of newly confirmed cases of COVID-19 and the number of hospitalizations in the United States have increased for four consecutive weeks, with an average of about 64,000 new cases per day in the past seven days.

 

Secondly , the Biden administration's strong economic stimulus measures in the short term are unsustainable. In response to the crisis, Washington has approved trillions of dollars in recovery aid, including last month's $1.9 trillion rescue plan, which included $1,400 checks for Americans. Biden recently announced a $2.3 trillion infrastructure plan.

 

In summary, UBS analysts believe that this trend of retail recovery will be short-lived . In fact, even if the epidemic and government measures are conducive to the recovery of the retail industry, the rising trend of online consumption will still have a greater impact on the retail industry.

 

Analysts at UBS predict that twice as many physical stores will do double duty, selling goods offline and fulfilling online orders, and that e-commerce sales could account for 27% of total retail sales by 2026 .


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