Department stores will be at high risk while home improvement shops should fare much better, analysts at UBS said.
The past year has seen 2,000 retail store closures, with the likes of Bed Bath & Beyond, Foot Locker and Walmart shuttering locations as they look to save money. But that trickle is set to turn into a flood in the next five years, according to one Wall Street analysis that predicts 50,000 stores will close.
The U.S. currently has roughly 940,000 stores and the UBS prediction"simply implies that there will be 5% fewer stores by the end of 2027," analysts said.to the National Retail Federation, about 70% of retail sales still come from brick-and-mortar stores, meaning retailers could suffer greater losses once they close off the places where customers physically stroll and shop.
Stubbornly high inflation in recent months has pinched household budgets, causing consumers to pay elevated prices for everyday staples like gas, groceries, clothes and housing. By comparison, UBS expects home improvement stores to lose only 210 locations and auto parts stores to stay steady. Both job growth and year-over-year sales have increased at home improvement and auto parts stores, UBS said — two reasons why that sector of retail likely won't suffer as many closings in the future.
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